Legal Question in Tax Law in California

gift tax

$10,000 gift money PER YEAR was given to my adult child from his grandmother but instead of receiving this sum, an irrevocable trust was set up in his name with myself (his mother) as trustee. This trust money was invested in mutual funds by a brokerage firm overseeing it. My Question: Can I release $30,000 of this money to my son all at once without incurring any tax consequences?


Asked on 12/09/01, 1:00 am

2 Answers from Attorneys
Joel Selik www.SelikLaw.com

Re: gift tax

Need to review the trust document. There is no tax ruling preventing release if the trust so allows. To be certain, see an estate planning attorney.

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Answered on 12/09/01, 11:38 am
Robert Miller Robert L. Miller & Associates, A Law Corporation

Re: gift tax

Thanks for your posting, which was intelligent and poses a good question.

As you know, the IRS rules and regulations state that a person can give away $10,000 per person per year tax free. However, in this case it was not given directly to "a person" but to a trust to be held for the person. The fact that the trust was irrevocable means that there are no tax consequences to the grantor of the money, but depending on whether this trust is a tax free trust or is taxable, or a retirement account, there may be different tax consequences.

You might want to either call the brokerage company and ask if this was marked as a non-taxable account (for which they will not issue a 1099 or withhold funds upon distribution). You might want to bring the trust documents to an attorney for an answer as well.

Thanks, and please feel free to email if you have any further questions or want more information.

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Answered on 12/09/01, 4:12 pm


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