Trust with annuity income-any insurance people out there?

[joanmcq]

Client set up a special needs trust for her disabled son from a settlement back in 2001. Most of the funds from the settlement were put into a single premium immediate life annuity. I have the contract and it is sparse; no mention of an interest rate, just that beginning on 5/1/01 'certain' annual payments of $2,000 would be made for 5 years, and then 120 guaranteed 'life with certain' monthly payments of $645 would be made. I did the math, and for a single payment of $88,603.05 in April 2001, the beneficiary is guaranteed payments of $87,400. The trust is a qualified disability trust, so it only has a filing requirement if income is over $3,700.

I did a bit of research, and found, as I suspected, that the payments are supposed to be mostly principal with some taxable earnings. The client thinks all of the payments are 'income'. Does anyone know how I could determine the split between principal & earnings, or is it all a return of principal until the single premium is paid?

Late night last minute trust stuff. They've never filed a return for the trust, even when the larger payments from the annuity started. The only other income is $14 of interest on a bank account.

[Elrod]

joanmcq, The answer has to be with the company that administers the trust.

To be safe and accurate, thats where I would start.

[joanmcq]

They send NOTHING to the trustee. No statement, no 1099-R, nada.