Trust income

[KWF]

Revocable trust is set up to distribute income & principal (if needed) for wife's support. Upon wife's death, trust assets are to be distributed to children.

In the year the wife dies, she takes distributions for her support up to the date of her death. Later in the year, all remaining trust trust assets are distributed to children and trust is terminated.

How is the trust income for final year allocated between wife & children?

Is income allocated simply in proportion to total distributions wife & children each receive throughout the year?
Or is income allocated by splitting year to before wife's death & after wife's death, and none of income that is gererated before wife's death is allocated to children?

Trust document or state law do not address this issue.

[Davc]

I believe it would be proportional to distributions.

[Burke]

I would disagree. Up until the wife's death, a revocable trust would be a disregarded entity and all income would be reported on her tax return. After her death, the revocable trust ends, and any income from the now irrevocable trust is taxed to the estate (and/or children respectively.)

[Gary2]

I would disagree. Up until the wife's death, a revocable trust would be a disregarded entity and all income would be reported on her tax return. After her death, the revocable trust ends, and any income from the now irrevocable trust is taxed to the estate (and/or children respectively.)

I'm now confused over who established the trust or whether or not the wife had the power to revoke it.

I originally read it as implying the husband set up the trust, passed away, the trust became irrevocable when the husband died, and the wife had been receiving income for some time. In other words, I just assumed that the fact it was a revocable trust when created was a red herring.

But I suppose it's possible that the wife somehow retained the right to revoke the trust, in which case your interpretation makes sense.

[Burke]

I took OP at his word that it was a revocable trust. But even if it were not, under the circumstances you describe, the income would be reported on the trust return up until the wife's date of death and distributed via K-1 to her personal return based on distributions, or possibly paid by the trust depending on how it was set up, then anything after that to her estate and/or beneficiaries established in the trust document and treated there.