Trusts

[KEYWEST_RICKS]

I have a client that asked me about a trust for a relative. Seems that the father passed away and at that time a trust was created with life insurance proceeds to be used for minor childs education. They claim that no 1099 has been received but that the trust did have interest and dividend income. I do zero trust and estate returns. Who claims that income? the minor child or does there have to be a trust return?

thanks

jeff

[michaelmars]

GOTTA READ THE trust but most likely the trust files and pays the tax

[BulldogTom]

Michael is right. You cannot answer the client's question without reading the trust document. That document gets to make up the rules for everything (within the confines of the law - but with a lot of room to taylor to the grantor's wishes). Ask for the document, ask your client to give you a list of questions that he wants answered, bill for your time. Even a simple document will take 2 hours to read through.

Good luck.

Tom

Lodi, CA

[DANRVAN]

You have to be kidding. Why would it take two hours to read a simple trust document?

Michael is right. You cannot answer the client's question without reading the trust document. That document gets to make up the rules for everything (within the confines of the law - but with a lot of room to taylor to the grantor's wishes). Ask for the document, ask your client to give you a list of questions that he wants answered, bill for your time. Even a simple document will take 2 hours to read through.

Good luck.

Tom

Lodi, CA

[BulldogTom]

You have to be kidding. Why would it take two hours to read a simple trust document?

The smallest ones I have seen have about 30 pages and the sections are separted by tabs. The client says they are simple. A lady brought one in last year that was over 100 pages. It was a simple trust with no real complications, but it was still 100 pages. I guess I don't read that fast.

[michaelmars]

at $300/hr i can read real ssssssllllllllooooooowwwwww

[Linda Mathey]

Most attorneys I work with give the client a one page analysis of the trust listing section numbers and what they cover. Makes it easy to review a trust document.

[KEYWEST_RICKS]

i am back at this trust. the only thing they have is the will which says savings account goes to my grandson.... if he is not 25, which he is not.... hold it in trust till he is 25. trustee/executor got a federal id number and opened up an account. the account is in the federal id number that they obtained for the trust and it has $3000 of interest and div income for 2007.

they say there is no other trust documents other than the paragraph in the will. should the 1041 be completed as a complex trust and pay the tax on the income or must the trust pass through the income to the beneficiary? sorry to keep beating a dead horse on something that is probably very simple to some of you but i never do trusts and really only trying to help out a friend here. thanks so much for your help

thanks

jeff

[BulldogTom]

<<should the 1041 be completed as a complex trust and pay the tax on the income or must the trust pass through the income to the beneficiary? >>

The Trustee/Executor needs to answer that question for you. It sounds like you have the tax treatment figured out depending on what the true fact pattern is. Don't let the client make you make a decision they need to make. The Trustee/Executor is responsible for acting in the best interest of the beneficiary. Don't get into that part of the discussion. You are asking the right questions, but the answer needs to come from the person responsible for making that decision.

Tom

Lodi, CA