Trust Experts

[S T]

Okay Burke and a few of you that are Experts on Trusts,

I have a taxpayer that passed away - with a Revocable Living Trust and daughter was named on the Revocable as Co-Trustee, so that during the t/p's lifetime she could assist in handling affairs.

Now that the T/p is deceased, income and assets are now in the Trust, and I need to file the SS-4. While reviewing the documents, the daughter that was named as co-trustee, is 2nd successor trustee.

Question, when completing the SS-4, don't I have to list the First Successor, to the Trust which is a Son?? And he will be the one named to handle the Affairs of the Trust? We have some "death benefits" pending the Trust ID#

Thanks,

Sandy

[Davc]

Unless the son is unwilling or unable to take on the responsibility he's the trustee and should be listed on and sign the SS-4.

[Burke]

I agree with this. Are trust assets simply going to be disbursed? Is there an estate also, with assets not in the trust? Election can be made to treat trust assets as part of estate if desired, to eliminate two tax returns, and has the advantage of being able to use a fiscal year rather than a calendar year.

[Mo Sheets]

Agree with Dave

I agree with Dave. If the son is listed as the trustee and the daughter as the successor trustee in the event something happens to the son, then the son's name should appear on the form.


Good luck!

Mo

[S T]

Thanks Trust Experts

Now what we are finding is that

The Investment Co that holds the "bulk" of the assets - cash-stock-bonds, is not requiring that we have a separate Trust ID# after the DOD. Only the Calif Retirement system for $ 533 of pro-rated retirement benefits.

Investment Company is transferring most all Stocks to named beneficiaries, cash is not making hardly any interest - bond holdings will be transferred. Successor Trustee was thinking to hold back in reserves $ 20K for unpaid bills (which would be all medical) but seems that should be un-necessary.

So in view of this - if I have a closing month statement as of DOD and then closing year stmt for the account - Investment Co is going to report under decedent's SSN# - which we know is not correct - I can nominee the pro-rata portion on the decedent's return., for the earnings after DOD.

Income based on 2010 reportings was approximately $ 11,500 Dividends about 50% of which were Qualified (generated from Stock that will be transferred ) and $1041 Interest (generated from Corp Note and the MM account)- DOD was late June 2011

Will this work and bypass applying for Trust ID and filing a Trust Form 1041?

Sandy

[Davc]

Nope. It sounds like a complex trust with a filing threshold of $100.

[Gary2]

Investment Company is transferring most all Stocks to named beneficiaries, cash is not making hardly any interest - bond holdings will be transferred. Successor Trustee was thinking to hold back in reserves $ 20K for unpaid bills (which would be all medical) but seems that should be un-necessary.

I guess I've never really thought about this case before. I'm used to thinking of either payable on death accounts, with no trust involved, or having the account simply in the trust's name, with the trust and not the investment company responsible for making the distribution to the beneficiaries.

How is such an account titled? John Doe Revocable Trust, POD Jane Smith? Or something more complicated? Or is the investment company a trustee of the trust?

[appelman]

Gary2's questions seem critical.

I wonder if the "Investment Company" really has the authority to make this decision.

[S T]

Account

Account is in the Revocable Living Trust (Jane Doe Family Trust) - (Son) Successor Trustee spoke with the Investment Co and was advised that they could make the distributions to the individual beneficiaries of the trust

Their legal dept stated they are not requiring the EIN# of the Trust, as the Account will be closed on distribution and the transfer of Stocks. They are planning on reporting all dividend income, etc under the decedent's SSN

Sandy

[Burke]

When the RLT was set up, there was a trust document. Get it. It determines what happens at death, and the Investment Company likely has this. If it provided for immediate distribution directly to named beneficiaries, then they can do this as a convenience to the trustee if he directs them to, although it is the trustee's responsibility. Did they already have a Trust ID# on file for this RLT? Sometimes, they do. Also, was everything else titled into the trust? I have never seen one that had everything in it. The will controls anything which goes into the estate, and if it has a pour-over clause, then anything left out of the trust can be swept into it for distribution. You will need both documents to determine proper completion of the tax returns. As I said in an earlier post, executor (and trustee if agreeable) can elect to treat trust assets as estate assets. Although the instructions say to apply for a Trust ID post-death, and file a (final) return showing no income if you make this election, it has always seemed stupid to me to do so. Only if it stayed open more than 2 years would that be something which was necessary. You are correct in that income post-DOD will have to be nomineed out on the decedent's final income tax return. Also, the trustee's concern about holding back certain amounts to pay estate expenses highlights the problems with having everything in the trust, unless it provides for this.

[S T]

Rlt

RLT, has never had a tax ID#

Under estate tax limit - no 706

All assets are in the RLTrust, which consists of the Investment Acct (only account)- personal items were pretty much distributed pre-death, as decedent has been in a Nursing Home the last 18 months.

Trust doc states - At settlor's death- Trust pays Settlor's Final Expenses, remainder shall be distributed to the named (5) beneficiaries.

Final Expenses are Funeral and Nursing Care, and Medical.

Sandy

[Burke]

I was editing my post when you posted. The trustee then must hold out certain amounts for the settlement of final expenses, and the Investment company should not do anything with the accounts until so directed by the trustee.
Also, you said in OP that there were some death benefits pending Trust ID#? Assume payable to trust?

[S T]

Retirement

There is a Calif Retirement amount of $533, that does not have a beneficiary name on it, and they were requesting the Trust ID# - This seems to be a "hiccup"

Life Insurance under this account also of $500, but CAL PERS is making a payment of $100 directly to each beneficiary and has the SSN of each

Seems all final expenses have been paid, unless there is a "late" medical bill, that no one is aware of. Where the investment accounts are now, they stated they could hold Cash in a non-interest bearing account for a few months. Investment Co is distributing or transferring title to Stocks per the direction of the Trustee. They have a copy of the Trust.

I think there should be a Trust ID# (at least that has always been my experience), but Trustee does not want to and Inv Co is saying they are not requiring.

Sandy

[Burke]

Doesn't sound like there will be any reportable taxable income, so no trust or estate return required, but you may have to get one just to get payment of the CA retirement. They have to put something on it, unless trustee can convince them to also split 5 ways.

[natiro]

Trust

It's been so long since I've posted. . . .!

The trust is revocable until the date of death, then becomes irrevocable. Technically, the account should be in trust EIN from date of death until distribution to beneficiaries. If there was income to the trust between date of death and distribution to beneficiaries, and if the amount of income necessitates a Form 1041, then I would report as nominee income on deceased tax return, back it off, then report on the 1041. It sounds like the estate/trust will all be settled fairly quickly, so the 1041 will probably be the final filing. In that case, all income and / or excess deductions would be passed out to the beneficiaries on K1s. From what you say, there may not be any expenses to settle the trust (funeral, medical, and nursing care are not deductible on Form 1041), but if there are legal and accounting expenses, those would be deductible.

It would be more accurate to report the actual income from date of death until distribution, rather than to prorate it. Stocks and bonds pay interest and dividends on specific dates and this information should be available on monthly statements so I would use those to determine the actual amount of trust income.

It only takes minutes to get the EIN online so I'm not sure why this would be an issue to the trustee.

I hope this helps!