The Listen to Lawrence Letter: Gifts from trusts

CLIENT QUESTION:

My daughter is the trustee and beneficiary of my irrevocable Medicaid trust which you created for me. Can I give my daughter $75,000 cash from the trust account? Is there a gift tax consequence?

MY RESPONSE:

The trustee can give your daughter the $75,000 and no tax will be due!

The way we set up these trusts is to allow the trustee to make gifts from the trust to the trust beneficiaries, in any amount at any time. However, we do require the trustee to first obtain your written consent prior to making any such gift. If the gift exceeds $18,000 to any person (together with any other gifts you may have given this person during the year) then this triggers a requirement to file a gift tax return, although no tax will have to be paid unless your lifetime gifts exceed the federal exemption currently hovering near $14 million. I doubt this will be a problem.😊 Please note that while I counsel my clients to file these returns, I find that they all ignore my advice because no tax is due. Go figure.

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