Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
The trust must distribute all income. Can the trust distribute shares of stock at a value equal to the cash that would be distributed? If so, how would the vale of the distributed shares be calculated, given they have a capital gain?

Many thanks in advance.
Print the post Back To Top
No. of Recommendations: 3
The trust must distribute all income. Can the trust distribute shares of stock at a value equal to the cash that would be distributed? If so, how would the vale of the distributed shares be calculated, given they have a capital gain?

I would say that you need to ask the trustee, since these answers depend on the terms of the trust. If you are the trustee and don't know the answers, then you need to ask the attorney that helped you set up the trust. (You did use an attorney, right?)

AJ
Print the post Back To Top
No. of Recommendations: 0
The trust must distribute all income. Can the trust distribute shares of stock at a value equal to the cash that would be distributed? If so, how would the vale of the distributed shares be calculated, given they have a capital gain?

Probably not, but it all depends on the language of the trust document. Generally speaking, trusts consist of two separate pools of "value": corpus (the assets of the trust) and income (the money the assets generate). Most trust documents set different requirements and restrictions on the distribution of corpus vs. income. What you (or the trustee if that's not you) can do will be explicitly stated in the trust document. If it isn't, you need to refer to your state's laws on trust administration.

Ira
Print the post Back To Top
No. of Recommendations: 0
Many thanks for this response and for that of AJ.

The trust allows for distribution of income only. Principal will be distributed according to the Rule Against Perpetuities. There is no language in the trust that would prohibit distributing stock equal in value to the income received by the trust, nor any that in any way addresses the issue.

There would, of course, be no advantage to distributing stock if the capital gain would first have to be paid by the trust rather than after by the beneficiary.

The trust is a NY trust. I could find nothing by an online search of NY tax trust law. There is no wording in the trust that applies to that question. The lawyer who drew up the trust is deceased. I am trustee of the trust.
Print the post Back To Top