Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1

If a trust distributes income to a beneficiary, the beneficiary pays the tax, not the trust.

That is my condition. Because of distributions from the Trust, it is down to alot of one common stock, a significant health care mutual fund and a preferred stock plus some cash. If the common stock is sold in part, very large capital gains would be entailed as the stock has been held for something like 50 yrs. As I am retired, my paying these taxes on capital gains would seriously jeopardize me, so the trust pays them. As a result I do not trade in the trust account to keep taxes to a minimum, essentially just the capital gains tax on the health care mutual fund. If I sold something in the Trust, I would then have to sell extra shares to cover Federal and State taxes so I just let the account run, something I had to do in the distributions (for example paying off the grandchildren's college debts which is in the Trust).

I, of course, pay the tax on the dividends and interest I get from the trust.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.