Question on taxes on income of a Living trust after death

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chuck h
Posts: 61
Joined: Fri Mar 20, 2009 9:13 am

Question on taxes on income of a Living trust after death

Post by chuck h »

My mother passed away in June 2010. The beneficiaries of her estate are my 2 sons and I. She lived about 1500 miles from me and the executor of her estate is a friend of hers and an insurance salesperson. All of her assets are inside of a Living Trust.
My question relates to her income tax filing for 2010. I am in the process of preparing it and noted that there are 3 Form 1099R's for the cashing in of 3 annuities after her death with about 12k of income reported on the 1099's.
In addition there is a sale of a mutual fund which resulted in a loss, again after her death.
From my reading and research, I believe the transactions that occurred after her death (but in the same tax year) should be included in a fiduciary tax return (Form 1041). Compounding matters is that the executor has not applied for an estate tax ID and all the tax documents (1099's) use her SS number. Is this correct?
Thank you.
JDCPAEsq
Posts: 1835
Joined: Mon Mar 05, 2007 2:58 pm
Location: Southwest Florida

Post by JDCPAEsq »

Are there estate assets or was everything in the trust which is now terminating? Is there a personal representative or are all the assets controlled by a successor trustee? Regardless, the income earned after death would not be included on her final 1040. If the trust terminated at her death you should each pick up your share on your individual 1040's for 2010 unless the trust terminated and was paid to the estate. You may not need a tax ID for the estate.
John
Topic Author
chuck h
Posts: 61
Joined: Fri Mar 20, 2009 9:13 am

Post by chuck h »

Everything is in the trust which is now terminating. The successor trustee is also the executor of the estate.
Also, even though the income and the 1099's from the annuity companies were issued after her death, the annuity income was actually earned up to her date of death and not afterward. Would that have any bearing on this issue?
Thank you .
JDCPAEsq
Posts: 1835
Joined: Mon Mar 05, 2007 2:58 pm
Location: Southwest Florida

Post by JDCPAEsq »

Based on the information you have given, it would appear you have no need for a fiduciary return, either for the estate or the trust. You need to allocate the income between the final 1040 for your mother and the 1040's for the three individual beneficiaries. In view of the fact the 1099's were issued to your mother, the IRS would likely accept the reporting of that income on her return.
John
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