The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Need tax consequences advice please Date:  1/28/2013  3:32 PM
Author:  TMFPMarti Number:  117570 of 127747

I am not totally clear about it. I do have an EIN for this trust and I'm pretty sure that the earnings of both of these accounts will be reported under the EIN instead of my SS number. The 1099s for either account has come yet but I'm hoping they will arrive soon. Both of these accounts are labelled (Using my full name) Trust. I have not heard any of the lawyers call this entity as a 1041 trust. As I understand it, this was the legal way for my parents to pass on their assets to my brother and I after they both died. My brother also has a trust account with a different EIN from mine at both locations. Does this information help identify the type of trust I have?

Also, the lawyers have said that as long as I take out the trust's earnings and report it as income on my personal income taxes that I do not have to file a trust tax return. I am to use the trust earnings income for my health, education, recreation, and welfare. I can also use some of it to pay the taxes. Does that info help identify the type of trust?

Sorry, but it just gets more confusing. Someone lurking please correct me if I'm wrong, but I've never heard of a trust with a 1041 filing requirement which could take care of things simply by distributing the income. While that's a way for the trust to avoid having to pay tax, it doesn't eliminate the need to file the 1041.

Yet it sounds like this is a testamentary trust established by your parents. Have you read the trust document? Who's the trustee? What powers does the trustee have? What restrictions are there on the trustee's actions? What happens to the trust's assets upon your death? Answers to these questions might clear some things up.

Rule Your Retirement Home Fool
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us