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now taxes on top for money we will never get to use. I wonder how many other ways MIL managed to screw her kids over with what is really not a lot of money.

As has been pointed out, you will not be paying taxes on that money unless it has been distributed to you, so you will not be paying taxes on money you will never get to use. Either the trust owes the taxes, which would be paid prior to distribution, or the person receiving the distribution pays the taxes, so if that is you, you have the money that remains after the taxes are paid. Either way, you are not paying taxes on money you aren't getting.

As far as your MIL screwing her children over, the money was hers to do with as she pleased. She didn't have to leave it to her children, and even though it seems to be part of a complex trust, she did opt to have it eventually go to her children or grandchildren. I'm sure you don't mean it this way, but you are most certainly coming across with a feeling of entitlement to MIL's money via an expected or desired inheritance.

But if that attitude is actually real, then perhaps MIL knew what she was doing.
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