Well, first ... The trustee isn't on the hook for paying for any trust bills out of her own pocket*. The bills are either paid out of a trust account or, in the case of income tax owed on income that was distributed to the beneficiary, responsibility for paying the income tax is passed out to the beneficiary via a Form 1041 Schedule K-1. (*Although it is my personal experience that if she has to set up a trust account at a bank that it is necessary to watch that lower level bank employees don't try to put the trustee's SS# as the tax id. Usng the trustees SS# is incorrect, but many lower level employees apparently aren't familiar with setting up trust accounts and using EINs as the tax id.)I'm set to inherit a little amount of money [. . .]
My mom is worried that she's going to have to pay taxes on my trust [. . .]
Beyond that, what needs to happen depends on exactly what the wording in the trust is and various technical legal and tax form details. In other words ... it depends on lots of details that strangers out in cyberspace don't know.
And that means, from your description, like it might possibly be a bit of "between a rock and a hard place" situation:
The obvious answer is that it sounds almost essential for the new (and "a bit overwhelmed") trustee (your mother) to go have a sit down with an estates and trusts lawyer to go through what she needs to do (e.g., Does the trust require that income be distributed to you annually or not?) and to get a recommendation for an appropriate accountant to do at least the first year's tax returns (so that your mother would have a template in future years if she decides at that point that the taxes are simple enough for her to handle.).
But I completely acknowledge that estates and trusts attorneys and accountants with the appropriate expertise are expensive. (A couple years ago when I was last dealing with estates and trusts attorneys in a moderate cost of living state, they ran $1000/hr.) So at some level of "little" the "a little amount of money" in the trust just goes "poof" to lawyer/accountant fees. And that kind of situation would put the trustee between a rock and a hard place.
But out here in cyberspace, it is hard to parse what the situation really is.
Statistics: Posted by cas — Sat Aug 31, 2024 8:26 am
