If I’m the beneficiary of an irrevocable Trust life insurance policy, what is the tax liability if I withdraw large parts or the entire amount of the funds at one time?

If I’m the beneficiary of an irrevocable Trust life insurance policy, what is the tax liability if I withdraw large parts or the entire amount of the funds at one time?

My mother created the Trust but due to loss of value and other reasons, she has sold the policy. The funds divided into three irrevocable trusts (one $200,000 trust each for my siblings and I). Over the time of the original Trust we did receive crummy letters but never exercised the ability to withdraw for the Trust. The newly created Trust will be created with myself as the trustee, which I understand makes it possible for me to do as I like with the trust, including disbanding it.

Asked on September 22, 2013 under Estate Planning, Washington

Answers:

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