| Income pass-through and trusts…read on:
READER QUESTION:
If my mother puts an income property into an irrevocable Medicaid trust, and the rental property income goes to the trust (into a trust account), can this be reported on her personal tax return and taxed at a personal tax rate rather than a trust tax rate?
MY RESPONSE:
YES! We purposefully draft these trusts as “grantor trusts.” What are grantor trusts, you ask? The tax law says that if the grantor (mom) puts her assets in a trust but retains too much control over the trust (according to the tax code), then she will be taxed on the trust income rather than the trust itself. All of our irrevocable Medicaid trusts are grantor trusts.
I hope this helps! |
