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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…]

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…]

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 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 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…]

Schedule K-1 for Estates and Trusts: General Information

An estate or trust’s income retains its character, and so beneficiaries must be informed of this character. The Schedule K-1 (Form 1041) gives the beneficiary the specific allocation between all items [more…]

Schedule K-1 for Estates and Trusts: Alternative Minimum Tax

As fiduciary, you will pass through all the tax preference items to the income beneficiaries of the estate or trust on Schedule K-1, line 12, along with their income distribution. [more…]

How to Allocate Income on Schedule K-1 for Estates and Trusts

Income earned by a trust or estate that’s paid out to a beneficiary in the same year as it’s earned must be reported to that beneficiary on Schedule K-1, and that income maintains its character when it’s [more…]

Schedule K-1 for Estates and Trusts: Income Items

The best Schedule K-1 is the one that breaks down the income information into its component parts. Just because the trust or estate’s tax returns don’t require certain information, doesn’t mean the beneficiaries [more…]

Meet Probate Court and Tax Deadlines for Estates and Trusts

You must meet all probate court deadlines to avoid being removed as executor or trustee and to avoid fines or even jail sentences. File income tax returns, Form 1041, and estate tax returns, Form 706, [more…]

How to Deduct Fiduciary Fees for an Estate or Trust

When preparing an estate or trust’s income tax Form 1041, you may deduct fiduciary fees. Fiduciary fees are the amounts executors, administrators, or trustees charge for their services. If you’ve figured [more…]

How to Deduct Interest and Taxes for a Decedent, Estate, or Trust

When preparing a decedent’s final income tax Form 1040, or an estate or trust’s Form 1041, you may deduct certain types of interest and taxes. Interest paid on mortgages and stock margin accounts may be [more…]

Farm Income, Ordinary Gains, and Other Income for a Decedent, Estate, or Trust

When filing Form 1040 or Form 1041, you need to determine if the taxpayer (whether trust, estate or decedent) has earned any farm income, and calculate any gains and losses on the sale of business assets [more…]

Calculate Income from Rents, Royalties, Partnerships, and Other Estates and Trusts

In order to file Form 1040 or Form 1041, you will need to determine if the taxpayer (whether trust, estate or decedent) has earned any incomes from rents, royalties, partnerships, or other estate or trusts [more…]

What Are Estate and Trust Gift and Generation-Skipping Taxes?

As the administrator or an estate or trust, be aware of the gift tax and the generation-skipping transfer tax. Large transfers made during lifetime, may be subject to the gift tax. To pay the gift tax, [more…]

What Are the Decedent’s Final State and Federal Income Taxes?

As the administrator of an estate, you must file the decedent’s final Form 1040, U.S. Individual Income Tax Return. Surviving spouses may file a final joint return for the year of the decedent’s death. [more…]


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