Personal Residence located on farm land in trust

[Gretel]

I just confused myself. This question is not for tax deductibility but for corpus allocations. All the land including the residence was put in trust (my client is spouse and trustee). Land is leased, so some of the expenses are deductible just like they would be on a 1040. Any money put into the residence for improvements should belong to the corpus of the trust and kept track of as a contribution from the trustee, right? Same applying to car and horses - both belong to trust, neither produces any tax deduction but for purposes of corpus I need to keep track of this, right?

Per trust document she has the freedom to do with income and corpus what she deems necessary to take care of her needs (or the needs of the children), would that give her the freedom to transfer the vehicle into her name? She is required to keep detailed records of corpus but can intermingle funds. I am asking because for very little this is complicated. I looked at the trust document and do not see that there is a way out until she dies.

Any idea?

[mastertaxguy]

And the lawyers say...

1. What do/does the lawyer(s) say?
2. If she can invade the trust at her discretion it would seem like she raid it and put all the assets in her name and dissolve the trust. That means cars, etc.
3. It is always good to first read the trust, then read it again, then read it a third time, and then have client authorize you talking with lawyer (on the trustee's nickle of course).
4.

[Gretel]

Thanks, I know, I know and honestly I cannot see how the attorney would be in a better position to come up with an "appropriate decision". She can take anything she wants from the corpus for her or the children's well being. She real question is how well do the children get along. Let's say she would give the car to one of her children (in dire straits) while at the same time the others do not get anything (they stand well in life), can the other's contest this later (once she is dead because before that time nobody cares)? Of course, but all that will happen is a different allocation of distribution to kids after death instead of a straight one by ownership %. The cannot sue the mom, she is dead. So, does it make really a difference what she does?

Another thought is that, aside the land, anything that ended up in the trust was purely by accident. I'll stop here.