Created Trust- Insert Personal Information

[Taxadvisor VA]

Client created a trust last November after Thanksgiving and had all financial information run through this trust except 2nd Home & Vehicles- which are not allowed to be included.

Question- Am I looking at two tax returns? One through the day before the trust had information included plus from the trust activated date to the end of the year?
Possible Answer- I am thinking YES!

First time for me as I have prepared trust and estate returns before but nothing like this.

Anybody have this situation? _____________
Thanks in advance,

Taxadvisor VA

[Koss]

Grantor Trust

That may be a revocable living trust, which is usually a grantor trust, which is a disregarded entity.

Does this thing have an EIN?

Was there a lawyer involved? Or is this a DIY affair? Or did he buy a "trust package" from some sort of promoter?

I think you should get a copy of the trust instrument. This might be an abusive trust.

You can't "run financial information through" a trust. The grantor transfers assets into the trust.

Can your client tell you, without any hesitation, who the trustee and the beneficiaries are?

If he can't, you need to be extremely careful, because that means that you are either dealing with an abusive trust that was sold to him as a way to avoid income tax, or you are dealing with a legitimate trust set up by a client who doesn't understand what it is or how it works.

BMK

[Taxadvisor VA]

Grantor Trust Reply

That may be a revocable living trust, which is usually a grantor trust, which is a disregarded entity.

Does this thing have an EIN?

Was there a lawyer involved? Or is this a DIY affair? Or did he buy a "trust package" from some sort of promoter?

I think you should get a copy of the trust instrument. This might be an abusive trust.

You can't "run financial information through" a trust. The grantor transfers assets into the trust.

Can your client tell you, without any hesitation, who the trustee and the beneficiaries are?

If he can't, you need to be extremely careful, because that means that you are either dealing with an abusive trust that was sold to him as a way to avoid income tax, or you are dealing with a legitimate trust set up by a client who doesn't understand what it is or how it works.

BMK

Response:

Thanks for the heads up on what to look out for. I didn't get into it too deeply with the client but they were reading from the ss4 where it says file 1041 by 4/15/14. I will proceed with caution and ask these good questions that you have laid out here. Again-thanks for the heads up!