need some enlightenment on how Trusts work... (funds, pay, million)

[Dreamsteeds]

My mother recently passed away, leaving me as sole heir to her Trust. I've been part of the trust and my husband has had her durable power of attorney for several years. We don't understand exactly how this will work, now; and would like to make some improvements to our home to make it safer and more comfortable for our old age. We're both 63 and living in CA.
If we pull some funds out of the trust, will we be liable for taxes on them? We have made an appointment with a CPA and will need to talk to an attorney, as well, but would surely appreciate any insights ahead of time.
Thanks so much.

[Donn2390]

Originally Posted by Dreamsteeds

My mother recently passed away, leaving me as sole heir to her Trust. I've been part of the trust and my husband has had her durable power of attorney for several years. We don't understand exactly how this will work, now; and would like to make some improvements to our home to make it safer and more comfortable for our old age. We're both 63 and living in CA.
If we pull some funds out of the trust, will we be liable for taxes on them? We have made an appointment with a CPA and will need to talk to an attorney, as well, but would surely appreciate any insights ahead of time.
Thanks so much.

Money you inherit is tax free up to, I believe the cut off point is now one million dollars. It might be higher now, it changes yearly. Thank GWB for that..! If the estate is less than that amount, you pay no taxes.
There are things you must do as trustee to settle the estate. Google "Estate Administration" for lots of information on how to do it to satisfy the government. There are things you have to do in a certain time limit.
Talking to a CPA is a good idea. Watch out for talking to attorneys, they will figure out some way to get their hands in the pot. I would talk to the attorney that wrote your parents trust.
When we had our trust done, the attorney gave us a book with instructions of exactly what you need to do at time of death. That book is designed to be given to trustee (you), so you have instructions to follow when the time comes. If you don't have that "Death Book", see if you can get a copy. It's not complicated, so don't pay a lawyer a lot for nothing. The lawyer was already paid when the trust was drawn up...
I recently went through this process when my mother passed, in California, and it is not a big deal...
Good luck...

[chet everett]

Depends on how the trust was structured, but in MOST cases where the trust was part of an estate their will be the potential of taxes to pay on the "inheiritance" subject to some pretty odd limits / rates. A good tax advisor will be invaluable in making sure that your RECORDS reflect the true value so that in the event you get audited you have the evidence needed to show that you paid anything you needed to.

Here are couple of important overviews:
Estate tax in the United States - Wikipedia, the free encyclopedia
Living trust - Wikipedia, the free encyclopedia

DO NOT RELY on this, because of you do get audited the IRS does NOT accept "I read it on Wikipedia" as a defense...

And California has even odder policies on death tax:
http://www.sco.ca.gov/col/taxinfo/estate/ (broken link)

[Dreamsteeds]

Thanks for your advice, gentlemen; I've read so much today that my eyes are crossed but I know much more now. Happy New Years.