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Author: Fletch52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121482  
Subject: filing trust tax return Date: 1/21/2009 9:39 PM
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Fools: Our firm is conservator for a client who has a trust. Trust holds his investments that were placed in trust when it was created. If there is no separate tax id for the individual and income/loss from assets in the trust shows the individual social security number does that mean we file just one return for this individual.

Conversely when would a trust file a 1041 return? Under which circumstances. Thanks for the clarification.

Fletch52
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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103845 of 121482
Subject: Re: filing trust tax return Date: 1/22/2009 9:46 AM
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You file just a personal 1040 as long as he is alive, assuming this is a revocable grantor trust (living trust). Upon his death the trust becomes irrevocable so you file a 1041 for periods after DOD, and 1040 for period prior to DOD, so you would have 2 returns in the year of his death.

ed

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103865 of 121482
Subject: Re: filing trust tax return Date: 1/22/2009 2:46 PM
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Fools: Our firm is conservator for a client who has a trust. Trust holds his investments that were placed in trust when it was created. If there is no separate tax id for the individual and income/loss from assets in the trust shows the individual social security number does that mean we file just one return for this individual.

Conversely when would a trust file a 1041 return? Under which circumstances. Thanks for the clarification.

Fletch52
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Not necessarily. The instructions to Form 1041 give pretty good instructions about this. See the part about Optional Filing Methods for Grantor Trusts.

It sounds like there's something else going on here.

A "conservatorship", as I understand it, is something like a guardianship arrangement, and the nitty-gritty distinctions might vary, depending on your state law. I'd say that implies that the grantor has either recently become incompetent or unable to handle his own affairs, or is a missing person, including maybe missing-in-action. Those are the kind of situations where conservatorships arise.

But that begs the questions:
1. Did the grantor's disability because the revocable trust to become irrevocable? If so, a 1041 is now required, as of the transition date.

2. Did it also mandate that some or all of the grantor's property, held in his own name, be transferred to the trust upon this occurence? Some trusts do just that.

3. Besides being conservator, are you also the new trustee?

Bill

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