When are Taxes Paid on Assets Withdrawn From a Trust?

by phyllis
(sedalia, MO)

When I take the money out of the trust to my money market account do I pay taxes then?

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Nov 11, 2011
Taxation of Living Trust Withdrawals
by: Mo Johnson

Hi, I'm assuming the trust is a revokable living trust. In that case the assets in it and income it earns is treated as yours for tax purposes. So, you already should have paid taxes on the income. Therefore, if you transfer it to your money market -- there shouldn't be more taxes due. Again, this is assuming you have paid taxes before on the money.

This is discussed more at Living Trust Taxes.

Another question I would have is why are you withdrawing the money out of your trust? Once you do that, of course, it is subject to probate if you were to pass away without putting it back into the trust.

As always, this is not legal advice since I don't know the particulars of your case or your local/state law. You should talk to a local estate planning attorney.

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