Trust issue

[TAXMAN]

A trust set up many years ago for a disabled tp. TP has reached the point of requiring in home care 24-7. If the trust allows payment for this care don't the people hired become employees of the trust or are they employees of the TP? Not sure the best way to handle. On one hand 941's etc required on the other hand Sch H. Your thoughts.

[Catherine]

My first thought on seeing the topic header was "don't we all have clients with trust issues?"  But that' s not the type in question.

Standard accounting answer is "it depends."  If they are people hired through an agency, they are most definitely NOT employees.  If they are people (like LPN's, say) who hire themselves out to many clients - again, not employees but rather contract workers.  If they are direct hires, it might make make the most sense to put them in as household employees on Sch H and have the trust reimburse the t/p for all costs.  Keep in mind that disbursements of corpus (if allowed by the trust document) are not income.... Many times income has to be distributed first, but sometimes it is left to the discretion of the trustee.

[Gail in Virginia]

I am glad I am not the only one that thought first about trust issues between client and preparer!  Maybe it is the time of year, but I am trusting my clients less and less.

[Abby Normal]

I solved all my trust issues by not trusting anyone. So far, so good!

[BulldogTom]

Wow...you guys are cynical.  I was right with the OP on an issue with a 1041 return.  I agree with what Catherine says.  It depends on how you set it up.  Best advice is to document the relationships before any in home care is provided.

Tom
Newark, CA

[TAXMAN]

We have a meeting with the trust attorney Friday to look at possibilities. As stated above these were things we looked at. Basically trying to keep as simple as possible. Not easy these days.