Living Trust

[mschmidtcpa]

Greetings -

I have a question. I have a client that is now involved in a living trust. The trust has activity similar to a K1 Partnership. The living trust is in the client's & wife's name. The ID number is under the client's SS number.

My question is how I report the following types of income:

1) Ordinary

2) Rental

3) Dividends

4) Interest

5) ST Cap Gains

6) LT Cap Gains

The structure of this follows that of a K1 Partnership. Do I enter these items manually into the return, or enter it on a platform like the Partnership K1?

Thank you,  

[utah-arizona-taxlady]

Everything on a Living Trust (sometimes called a Revocable Trust) go onto the owner's personal tax return.  The trust comes into play when the grantor(s) die.

[Just-Lisa-Now-]

it follows the SSN on the K-1, thats the return it goes on.

Fill out the K-1 worksheet n the program, it will put everything where it goes.

[jeffmcpa2010]

There should be no K-1. The Trust should be transparent for tax purposes so long as the grantor is still alive.

Ignore the trust, Everything goes on the 1040 just like it did before.

[Just-Lisa-Now-]

DUH, your right....OMG, is this tax season over yet?

[jeffmcpa2010]

Not Quite.....

[utah-arizona-taxlady]

I was feeling exactly the same this morning Just Lisa.  My clients are so late this year.  Something in the air maybe?   I'm not sure how I survived the last two years with the government adding time to the end.  I was ready to retire! 

[Just-Lisa-Now-]

I misplaced an envelope on Saturday, client dropped it through my mail slot, I picked it up, waved thank you to her through the window and set it somewhere Ive searched for 2 days....its just freaking gone!

I think Im losing it. 😄

[Dusty2]

@jeffmcpa2010 

Does the fact that the assets are in the Social Security number of the grantor make them attachable by nursing homes, etc?  If so that kind of trust would protect them?

Dusty

[jeffmcpa2010]

They would need to ask the Lawyer who set up the trust about that. Not my area of expertise.

[Dusty2]

@jeffmcpa2010thanks

[IRonMaN]

I'm no lawyer, but that hasn't stopped me from providing legal advice.  Until they die, it is still their asset so it isn't going to protect against the nursing home from potentially gobbling it up.

[utah-arizona-taxlady]

I agree they should check with their Lawyer but from my experience with my dad and my mother-in-law and a couple of tax clients a Living Trust/Revocable Trust does not protect their assets. 

I just found this online...  https://www.mhc-law.com/what-are-the-pros-and-cons-of-a-revocable-living-trust/  if it's reliable it might answer a few questions. 

Hang in there everyone!

[Dusty2]

@IRonMaN  thanks

[IRonMaN]

[mschmidtcpa]

Thank you,

I tried entering the SS number on the K1, but it errored out. 

Can you make a suggestion on what type of K1 to use? Is there any special method to get the SS # to be accepted?

Thank you

[jeffmcpa2010]

There is no K1.

THERE IS NOT K1- THE TRUST IS INVISIBLE TO THE IRS

Pretend the name on the paper didn't say trust, and just had the clients name and enter it that way.

Interest and Dividends on Schedule B etc. everything else wherever it goes.

[IRonMaN]

Do you enter it on the K2 or K3 instead of the K1? 🤣

[taxes96786]

A trust requires an EIN#