Reply to Tax question on income from irrevocable trust

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[quote=Anonymous]Thanks - I guess I will try to find a tax attorney. I was just hoping to get a general sense of what the result might be - e.g. would the gift tax be my liability or theirs?

More detail - their house is about to be foreclosed on due to a judgement against them.  The only source of money they have is this family trust set up by my grandmother.  It is an irrevocable trust - during my father's lifetime he gets the income and can access the principal for health costs. After he dies, it is to be wound down and split between my brother and me. As it happens, the amount in the trust would just cover the judgement against him.

The trustee won't pay the money out to my parents but will pay it out to us.  I am happy (well, maybe not delighted, but willing) to give them all the money. My concern is - if I get the money and then remit it all to him to cover this debt, would I be liable for a significant tax bill? for example, might the entire distribution be counted as my income tax liability?[/quote]

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