1041 estate

[fliszt]

Client's dad died & left bonds/securities to 7 children. Revocable Living Trust states home is to be used by spouse (step-mother to children) as long as she is alive and then reverts back to the 7 children. How is the home handled on the 1041? Does it need to be reported each year until it reverts to children and they sell it and then put it on the 1041 Sch D?
Thanks for the help
Larry

[OldJack]

Step-mother has a life-estate, the right to use the property regardless of the title/deed. A revocable trust ends upon death and must distribute its assets in a reasonable period. But the revocable trust can creates another trust to handle assets into the future.

The 1041 only reports income from an estate or trust and not the distribution of the trust assets that do not create income for the trust to pay taxes. If the trust has less than $600 taxable income nothing gets reported. If the trust distributes by title/deed the property to the children then the property is no longer in the trust even though the step-mother has a right to use the property.

[fliszt]

Thanks

Thanks for reply OldJack. But I'll bet I'm older.
OlderLarry

[OldJack]

I doubt that... I'm older than dirt and that means to many that I am also stupid, especially when it comes to taxes.

[dsi]

Old Jack, you are probably much wiser than most when it comes to taxes. Stupid? I don't think so.

[fliszt]

Naw

I don't think so OldJack. I've read your posts for 2 yrs and they're absolutely great! You and a bunch of others are great teachers. I appreciate all of you.
OlderLarry

[OldJack]

Well I'll be darn. You guys made my day!!! I feel better now. Thanks.

[fliszt]

you're welcome

I'd take off my hat while I bow to your stream of knowledge, but my bald head would get cold up here in Minnesota.
OlderLarry

[cpadan]

Jack I hope you will be sharing your knowledge with us for many years to come!
Dan

[OldJack]

Why thanks Dan!

I plan to stick around until they throw me off for being so darn disagreeable.