"NadCixelsyd" <nadcixelsyd[at]aol.com> wrote in message
news:865a5961-6992-4aba-9f41-a0fa2bb48485[at]q30g2000prq.googlegroups.com...
- quote -

There are two possibilities. The first, as has been mentioned, is that this
is a sprinkling trust, in which case the trustee would have the right to
distribute the income to your children, as well as you. Your letter to the
trustee would simply indicate that you don't need the funds and the trustee
would then exercise his/her discretion to distribute to your children
instead.

The second possibility is that the trust provides income to you for life,
then to your children. It is possible that you may be able to release your
interest in the trust. However, Section 2518 of the Internal Revenue Code
would be applicable. Since you have already accepted benefits from the
trust and more than 9 months has elapsed since the trust was created, your
disclaimer would not be a qualified disclaimer within the meaning of that
section. As a result, you would be deemed to be making a gift of the
present value of your income interest; i.e., the present value of the right
to $1,000 a month for the balance of your lifetime. Any competent estate
planning attorney can compute the value of the gift. I would guess it at
about $150-170k if you are 65. This is well within your $1 million gift tax
exemption.

To keep the State Bar and my partners happy, this is not legal advice. You
need to consult your own attorney.

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Stuart Bronstein wrote:
- quote -

No argument there...I just wanted to emphasize it really will depend on
the trust terms, noting in particular the OP's later followup that the
trust "basically calls for the decendants [sic] of XYZ to receive the
income" which makes it sound more like could be flexibility.

--

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dpb <none[at]non.net> wrote:
- quote -

You're right, trustees often have discretion on distributions.

I was reacting to the OP, who said, "My grandfather left me with a
trust fund that pays me $1000 a month. I've been collecting since his
death 31 years ago." Based on that it seems to me it is unlikely the
trustee has a lot of discretion. If he did, I agree with you that a
simple request to have the funds disbursed to other beneficiaries
should suffice.

But the best advice is that OP should have a local lawyer look at the
trust to establish exactly what his options are under the
circumstances.

Stu

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Stuart Bronstein wrote:
- quote -

I'd think as the beneficiary of the trust, that would depend on the
leeway in the trust document for the trustee to disburse to the other
beneficiaries prior to the demise of the primary beneficiary. Unless
that is proscribed therein, would seem to me no other reason he couldn't
ask the trustee to do so, and assuming the trustee was amicable
administrator, why he wouldn't do so.

--

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Stuart Bronstein wrote:

- quote -

Disclaiming your devisee interest may not extinguish the
rights of your creditors, if any.

http://supreme.justia.com/us/528/49/case.html

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NadCixelsyd <nadcixelsyd[at]aol.com> wrote:

- quote -

The other information given in this thread has been excellent. I'd
like to add this:

Normally to refuse ("disclaim") an inheritance and have it goe instead
to your children, you have to do so within nine months.

At this point you are considered the legal owner of the income interest
for life. You can't simply refuse it.

If you and your children are the sole remaining beneficiaries of the
trust, you may be able to terminate the trust, with you receiving the
actuarial value of your lifetime interest and your children receiving
the balance.

Or you may be able to transfer portions of your interest (worth up to
$12,000 per child, or $24,000 if you are married) each year, until your
entire interest is transferred.

Talk to a tax/estate planning lawyer about your options.

Stu

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- quote -

tax bracket that I. I figured that if they had the income, the taxes
would be less.

The trust basically calls for the decendants of XYZ to receive the
income. If I were to die, the income would pass to my adult
children. I'm just trying to speed up the process without dieing.

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On Nov 3, 7:34*am, JoeTaxpayer <JoeTaxpa...[at]comcast.net> wrote:
- quote -

Read the terms of the trust. It may be ( probably is) a "sprinkling"
trust whereby the trustee can divert the income to your children
instead of you. What with kiddi tsxes that may not do you any good
taxwise. You didn't say how old your children are.

ed

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NadCixelsyd wrote:
- quote -

It depends. You need to ask the trustee what the wording is of the
trust, which he should be able to share with you.
The trust may be funded and invested in a way that $1000/mo is at least
all of the trust's income. In that case, the money you receive (with a
K-1 I assume) is at least partially taxable to you. If you refuse it,
and it's left in the trust, it may be taxed at the trust's rate which is
likely higher than yours.
Why not accept the money and use it to fund 529 accounts for the
children? $6000/yr (per child if two) isn't a huge amount and will help
pay for their college.

Joe
www.blog.joetaxpayer.com

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My grandfather left me with a trust fund that pays me $1000 a month.
I've been collecting since his death 31 years ago. Knowing that my
children will be the beneficiaries, can I write the trustee and
permanently withdraw from this trust fund? I know I can refuse an
inheritance from an estate, but can I do the same to a trust fund
without incurring taxes?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >