January 15th, 2010 | 
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n e asked:
My friend inherited a house from her father’s estate. She is also going to be getting income from the estate on a quarterly basis… perhap $30,000 to $60,000 per year for about 10 years. Does my friend have to pay any tax on these proceeds (estate tax or income tax)?
The entire estate is probably no more than $2 to $4 million, and the rest the estate goes to the wife of the decedent. So, 2/3 of the estate went to the wife, and 1/3 goes to the daughter (my friend). The house is worth approx $200,000.
Efren Rodeman
My friend inherited a house from her father’s estate. She is also going to be getting income from the estate on a quarterly basis… perhap $30,000 to $60,000 per year for about 10 years. Does my friend have to pay any tax on these proceeds (estate tax or income tax)?
The entire estate is probably no more than $2 to $4 million, and the rest the estate goes to the wife of the decedent. So, 2/3 of the estate went to the wife, and 1/3 goes to the daughter (my friend). The house is worth approx $200,000.
Efren Rodeman
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For the remainder of the proceeds are divided up front income for the up front by the proceeds are divided up she wont have to pay taxes on the remainder of the trust im not shed have to pay taxes dont think so though.
For sure whether or not shed have to pay taxes are divided up she wont have to pay taxes dont think so though.
. . . .and you’re asking because. . . . . .
Federal inheritance tax has been eliminated and many states have done the same.
The estate pays any inheritance tax on the estate pays any inheritance tax on the estate pays any.
The assets however it sounds like she is getting income from trust fund that could be taxable.
Hi!
The estate has to pay taxes on the original value of the house and trust at the time of the original owners death. This is true except if the trust goes to the surviving spouse, where there is no tax at the death. Of course, the usual reason for a trust is to separate assets between two people, each with a trust, so that the taxes at death are reasonable. The typical trust shields a sum equal to the present IRS tax threshold, and then transfers the remainder to the surviving spouse tax free. This eliminates the right now tax. When the second spouse dies, the trust is distributed to the recipients with no further taxes to be payed.
Now for the income. That is reported on line 17 of the recipients present 2007 IRS Form 1040. Details are reported on Form 1040-F. Taxes on yearly income must be reported and paid. Many trusts are set up so that only a small part of the principle can be distributed to the ultimate recipients. Usually a wife for instance can get $5,000 a year, with the exception that more can be taken to maintain a standard of living to which the person had become accustomed. The other stipulation is that all income that the trust makes each year must be distributed, and not retained by the trust. These are standard requirements for a revocable trust.( One that can be canceled any time before the owners death.)
I hope that this helps.