Irrevocable Complex Trust

[peggysioux5]

Question regarding a complex trust – two beneficiaries of complex trust.  In 2020, trustee distributed $1,000 to one of the beneficiaries and nothing to the second.  Trust earned income in 2020 of $6,000 and normally accumulates the yearly income rather than disbursing.  Trust document states funds can be disbursed to beneficiaries at the discretion of trustee.  In my research, I read that the distribution to the beneficiary is treated as coming first from the income being corpus can’t be distributed without first distributing income.  If the trust is set up at 50% per beneficiary, is it possible to only distribute to one of the beneficiaries?

Peggy Sioux

[Lee B]

It would seem to me that what you have is not a tax issue but a legal question regarding the fiduciary responsibilities of a trustee.

This is why I keep my involvement with trusts to an absolute minimum. Too many trustees don't understand their attorney

and as a result are reluctant to ask the attorney questions, then end up winging it and then assume we as accountants

will just fix whatever. Then when you ask questions about problems etc, their eyes glaze over.

[Abby Normal]

11 hours ago, peggysioux5 said:

is it possible to only distribute to one of the beneficiaries?

Yes. I've never had one like this, so I don't know if ATX handles it like it does for partnerships or whether you'll need to do overrides.

[DANRVAN]

11 hours ago, peggysioux5 said:

discretion of trustee.

A discretionary trust can give the trustee complete authority to decide who gets distributions and how much.  Also whether to pay out of income or corpus.

 

11 hours ago, peggysioux5 said:

  If the trust is set up at 50% per beneficiary,

What does the 50% refer to?