How to Transfer Real Estate into a Trust
A grantor may choose to transfer real property into a trust. For trustees, funding a trust with real estate involves transferring the property’s title, drafting a new deed and getting it signed, and assuming [more…]
How to Fund a Trust with Life Insurance
Life insurance policies come in many flavors, and they guarantee a reasonably large cash payout down the road for a relatively small investment now. A life insurance policy can fund a trust that eventually [more…]
How to Fund a Trust after a Grantor’s Death
Often, trusts are created during the grantor’s lifetime, but they aren’t funded until after the grantor dies. If you’re a trustee of such a trust, there are certain steps to take to transfer assets into [more…]
How to Diversify Stocks for a Trust
Investing in the stock market is a popular way to produce income from trust principal for the trust’s income beneficiaries. Stocks, sometimes referred to as equities, are ownership interests in corporations [more…]
How to Distribute from a Trust with Age Provisions
Many trusts contain age provisions that distribute trust income and/or principal to the trust’s beneficiaries only when they reach certain ages. The administrator of an estate must honor the specific provisions [more…]
How to Handle Beneficiary Requests for Additional Trust Distributions
As the administrator of a trust, you may receive requests from beneficiaries for additional distributions. As trustee, you can accept or decline these requests at your discretion. When making these decisions [more…]
How to Make Discretionary Distributions of Trust Funds
Trust instruments usually give some guidance regarding what sorts of discretionary distributions a trustee can make to beneficiaries. Discretionary powers may be narrowly prescribed in the trust instrument [more…]
How to Prepare a Trust’s Initial Inventory
The initial inventory is the starting point of a trust’s history, showing each asset’s cost basisas the grantor acquires it. The trustee must collect and sort this data for the property funding the trust [more…]
How to Compile Records of Trust Transactions
As trustee, tracking all transactions in and out of the trust account can help in many ways. Record the transaction every time you buy or sell a security, receive interest or dividend payments, or make [more…]
How to Invest in Bonds for a Trust
Bonds are pieces of loans, packaged by a corporation or a government as investment product. When you purchase a bond, you’re purchasing a piece of someone else’s debt. In exchange for the money you’re [more…]
Personal and Household Property in Trusts
A grantor may own a revocable or irrevocable trust. The difference between the two types of trusts determines whether the grantor should transfer personal and household property into it. [more…]
How to Prepare a Trust’s Final Accounting
Before terminating a trust, you as trustee will need to prepare a final account and obtain assent from all remaindermen. These are your last steps, usually completed after distributing the final income [more…]
How to Produce Annual Trust Accounts
Trust administration is similar to organizing your own finances. However, a trustee must create a trust account for every year of the trust’s existence. This account traces all the activity in the trust [more…]
How to Determine a Trust's Schedule of Distributions
As trustee of an estate, you must determine the schedule of beneficiary distributions and be sure that distribution dates are calendared somewhere. The trust instrument may call [more…]
Consider Beneficiary Needs and the Trust’s Purpose
Beneficiaries’ needs change over time, and trust investments need to change in relation to them. As the trustee, you have to determine what the trust must do in order to meet those needs. You must keep [more…]
Invest for a Trust with Social Responsibility and Political Awareness
Socially responsible investing is becoming more prevalent across all sectors of the investment community. As trustee, you have the choice of investments. Even though many individuals are satisfied with [more…]
How to Prepare Supplements to Schedule K-1 for Estates and Trusts
While Schedule K-1for estates and trusts has space for much information, the fiduciary may want to give the beneficiaries more via supplements. The more information the better, including medical expenses [more…]
Recapture and Household Employee Taxes for a Decedent, Estate, or Trust
When you file taxes for a decedent, estate, or trust, you may have to pay recapture taxes or household employee taxes. Recapture and household employee taxes are included on Schedule G of Form 1041. For [more…]
How to Determine Tax Credits for an Estate or Trust
When filing taxes for an estate or trust, you can use tax credits to reduce the estate or trust tax liability. Enter the tax credits for your estate or trust on Schedule G of Form 1041. Credits available [more…]
How to Compute Taxes for a Decedent, Estate, or Trust
To prepare the decedent’s personal tax return or one for an estate or trust, you must calculate the tax after you determine the income and deductions. If you’re completing a Form 1041 and need to complete [more…]
How to Calculate Estate or Trust Income Distribution Deductions (Schedule B)
The Income Distribution Deduction (Schedule B) is unique to trusts and estates. When trusts and estates give income payments to beneficiaries, those payments carry income tax consequences for the trust [more…]
How to Prepare to File Tax Returns for a Decedent, Estate, or Trust
Income taxes are a main focus of estate or trust administration. As the administrator, you must prepare the decedent’s final Form 1040 and the trust or estate’s [more…]
How to Calculate Trust Accounting Income
As a trustee, you may need to use the Trust Accounting Income (TAI) formula to calculate the amount of income from the trust that you can distribute to beneficiaries. In some cases, you will need to use [more…]
How to Create a Payment Schedule for a Trust
As a trustee, you should establish a payment schedule for the trust to ensure that the trust has enough money when you make distributions to beneficiaries and when you pay taxes and service fees. To create [more…]
Form 1041 Questions for a Trust or Estate
If you’re preparing Form 1041 for an estate or trust, you need to answer some questions at the bottom of page 2 of this form. Questions on Form 1041 ask about tax-exempt income, individual earnings, foreign [more…]
