I need to know how many professionals and what special designations I really should look for to help me administer my mother's trust. Are there specific types of CPA's or Attorneys that I should look for, or can any accountant or lawyer do the job? I'm also reading what I can and getting very different answers regarding the tax issue for here in California. Here's my specific question: if a house is inherited and sold as part of a trust to be divided three ways, even if the house is worth less than one million dollars, are there still taxes owed by each of the three inheritors once they receive their distribution? I've been told by a guy I know that he had to pay income tax on his California inheritance after the home was sold because once the money was received, he became a "beneficiary" and owed income tax, even though there was no specific inheritance tax. So from the point a less
than $1,000,000 property first goes into trust until the final distribution of it's assets, what and how many taxes are required and at what percentages for not only an "estate" in California but also for it's "beneficiaries"? (I'm trying to cover all the potential bases. )
Your friend is incorrect and you should probably start interviewing attorneys to find one that gives you the answers that you feel comfortable with and that you think will be responsive to you and easy to work with. There is no inheritance tax in CA and the federal estate tax exception is $5M, not $1M. Inheritance is not income and taxes on the inheritance will not be due. A fiduciary tax return will be due and a K-1 will be distributed to the beneficiaries, but no tax will be due. Do keep in mind however, CA withholds 3% from all real estate transactions, some of which will likely be returned when the fiduciary tax return is filed.