Living trust - tax questions after death of grantor

Asked almost 2 years ago - San Bruno, CA

My stepfather who passed had a living trust where I was named as the successor trustee. My mother passed several years ago so he was single at the time of his death. He didn't have many assets - a SUV, some coins, bank account, 50K life insurance policy, a few other items - no more than $100K (including insurance) I would estimate and all part of the trust.

His trust specifies that 1 person gets $5K, a non-profit gets $5K and than the balance s is split between my brother and I.

1) I understand a tax return needs to be filed for the trust, does one need to be filed for my stepfather too or is it all part of the trust? (If it matters my stepfather main source of income was social security)
2) What is taxable as part of the trust?
3) Anything else I should know?

Attorney answers (3)

  1. Eric Jerome Gold

    Pro

    Contributor Level 19

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    Answered . My colleagues have provided you with sound advice. You will need to file a final tax return for your stepfather. Then, you'll need to obtain a new tax ID for the trust. It is always a good idea to file a return for the trust, even if there is no income, to avoid the IRS coming back to you later.

    When responding to questions posted on Avvo, I provide a general purpose response based on California law as I am... more
  2. Steven J. Fromm

    Contributor Level 20

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    Answered . Mr Frederick offers sound advice. Basically, when a person dies a final income tax return for the last year of his life must be filed. IThe estate then must file for the period commenc ing after his death if they receive over $600. The estate/trust in this case can file on a calendar or fiscal year basis. Another reason to file a return is if expenses exceed income in the final year of an estate.
    Get with an estaetes/tax attorney to get specific advice.

    LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia... more
  3. James P. Frederick

    Contributor Level 20

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    Answered . It sounds to me like you have it backwards. You will definitely need to file a final income tax return (Form 1040) for your father. You may or may not need to file one for the trust. You are going to need to get a Tax ID number (EIN) for the trust, because your father's social security number cannot be used, now that he is deceased. The estate does not need to file a tax return unless it earns more than $600 income, over the course of the year. It may be a good idea to file a return, (Form 1041) ANYWAY, because that will cause the IRS to close the books on the trust, as well. Otherwise, they might send you a letter a couple years from now, asking why you have not filed anything.

    James Frederick

    *** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and... more

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