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You've got good questions there. But they are ones that you'll need to talk to a professional to answer.

Offhand, there are 4 taxes I can think of that might apply: Federal estate tax, state estate/inheritance tax, Federal income tax, and state income tax.

Of those, the only one I'm pretty sure you won't need to worry about is the Federal estate tax. That tax is on the estate. So whoever is administering your wife's grandparents' estates and your wife's father's estate will deal with those.

State estate taxes are also typically handled by the estate and not the beneficiaries. State inheritances taxes, however, sometimes fall on the beneficiary.

The income taxes could be your concern, particularly since there has been some time since the grandparents passed away. The inheritance itself is not taxable income. But it sounds like the grandparents' left their estate to a trust. After their passing, the trust likely generated income. Someone has to pay income tax on that income. The trust could pay the tax, or the trust can pass the taxable income through to the beneficiaries (that's you). You'll need to talk to the trustee to find out how much taxable income you will get from the trust, if any.

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