“Thought for the Day” #696 – by Stephen R. Elville, J.D., LL.M.

March 31, 2016

One of the downsides of leaving assets in further trust for children, grandchildren, nieces & nephews, and others, is the cost of trust maintenance.  A trust created at death for a beneficiary is irrevocable and is a separate tax entity for income tax purposes.  It therefore has its own EIN and generally requires the filing of IRS Form 1041 – Fiduciary U.S. Income Tax Return For Estates and Trusts.  The analysis of outright distribution versus distribution in further trust is often the trade off between management, control, and asset and other protections versus increased complexity and long-term costs.