Deceased had Living Trust. Trustee/Executor obtained EIN/Tax ID number and opened deceased named trust. Proceeds from sale of property named/titled in trust deposited into the trust. I.R.S. sent letter to Trustee/Executor advising a tax return needs to be filed on the trust. Will taxes be due on proceeds from sale of home titled in trust of the deceased? Attorney representing deceased estate is requesting the funds be given to him to place in a trust account. What options are available to place in Independent Company to manage trust funds to prevent misuse by anyone? How much does this usually cost and how is this done? Can proceeds in this account be used to pay deceased state & federal taxes due, attorney fees,funeral expenses? Who can set up the trust account with funds?
Should client be weary about attorney that does not want to set up the proceeds into an Independent Trust Company and insist on putting funds into his trust account?
Taxes due on sale: If this was a revocable trust where the assets in the trust were included in the estate, then they would get a step up in basis as of the date of death and in that case there may little or no capital gain tax. (If death occurred in 2010 it is more complicated and beyond the scope of this forum).
Attorney:The attorney is out of line; this proceeds are the trust's property and should be distributed to such trust. If he is concerned bout his fee, it can be paid at settlement table.
Independent Trust Company: You need to review the trust provisions as it may or may not allow for this flexibility; otherwise you need to petition the court for such a change
Expenses: Once again, the trust may allow for this, but you must look at the trust document.
Set Up: The trustee is the only one who can act for the trust.
This situation requires an estates attorney from Texas to do a complete review.
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