The Listen to Lawrence Letter: Trusts and Investments

February 6, 2023
January 17, 2023 • Volume 4 Issue 106
Dear Clients and Friends,
Trusts and Investments….read on.

CLIENT QUESTION:

We have our house in an irrevocable MEDICAID trust and we are buying an investment property to rent. Can we put the income property in the trust and have the trustee rent the house and put any income into an account owned by the trust? If the trustee was to use the money in the trust account to buy gifts for us or pay bills for us would that cause any problems? Who would pay income tax on any profits from the rental? The trust or us?

MY RESPONSE:

Well, there are a lot of questions here. I will break it down based on limited facts.

  1. The trust can purchase an investment property, rent it out, and collect the income.
  2. You can purchase an investment property and add it to the trust, although it may be better to create a second trust for this purpose.
  3. The trust can collect the income and pay that income to you ONLY if the trust says you can…and most of my trusts do NOT say that you can.
  4. The trust can never buy gifts for you or pay your bills.
  5. The income tax will be paid by both of you regardless of whether or not you receive the trust income.

 

If you wish me to elaborate further on any of these issues, let me know and I will address your question in a future LISTEN TO LAWRENCE LETTER.

I hope this helps! Please forward this email to your friends and relatives to share these informative answers to some very commonly asked questions.

And, if anyone you know would like to receive this

Listen to Lawrence Letter, just have them email me at

info@davidowlaw.com and I’ll add them to the list!

 

As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected.

Stay safe!

Until next time...peace, health and happiness. Lawrence Eric Davidow