Trust Form 1041 - which state?

[David]

Decedent, who was a CA resident, had a revocable trust set up in CA.

Of course the trust is now irrevocable upon date of death.

The trustee and 2 other beneficiaries are CO residents and the fourth beneficiary is a NV resident.

The revocable trust was set up by a CA law firm and the trust document states that the validity, construction, and all rights shall be governed by the laws of the State of California.

The assets are under the limit requiring an estate tax return.

I have 3 questions:

1. Is the trust identified as a Decedent's Estate, Simple Trust or Complex Trust on Form 1041?

2. The trust document doesn't say whether distributions are required to be made to the beneficiaries. For this type of trust is it understood that distributions are required?

3. Since the trustee resides in CO, is the trust tax return filed in CO, CA or both states?

This is the initial year of the irrevocable trust and there is about $11K of interest and dividends for 2013. Distributions were made for amounts greater than the income. So there will be no trust tax due. In this case does a state return even need to be filed?

Thanks.

[Catherine]

Definitely CA trust -- but check the CO laws; some states require trust return based on where TRUSTEE resides. Else just CA. File returns even with no tax due; else they WILL come looking for it.

If trust document does not require dist's it may be complex EVEN IF dist's were made.

[David]

Thanks for your help with this.

The only income was interest and dividends. According to the CA instructions, interest and dividends are not considered CA source income. So it appears that a CA return may not be required. Or am I interpreting this incorrectly?

Thanks.

[Catherine]

Even if not required, my advice is to file the CA return and at least start the SOL. And make sure you read the state rules for the trustee's residence (was it CO?) as the trust may have a filing requirement there, even if no income in that state.

[David]

Yes, the trustee's residence is CO. No one except the decedent was or is a CA resident.