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Financial Planning / Tax Strategies


Subject:  Re: By-pass Trusts and Income Taxes Date:  4/7/2002  6:29 PM
Author:  edcosoft Number:  60071 of 129998

The trust income can be distributed to the widowed spouse and is then taxed on their 1040; or it can be retained in the trust and taxed on the trust's 1041, or it possibly can be distributed to your wife, definitely after the second death, but possibly before, to be taxed on her 1040.

She need not "get" the money to be taxed on it, but if it is "credited" to her she'll eventually get it after the first of the next year, or as a "previously taxed capital distribution". The trustee should be able to tell her what's happening. ed
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