Estates & Trusts: Overview Flashcards
What are the 2 types of artificial entities that must file a 1041? What type of return is a form 1041?
- Trusts
- Estates
- Form 1041 = Fiduciary Income tax return
Trusts can be set up while you are alive and they can be set up after death. What are these two distinctions called?
inter vivos and testamentary (respectively)
What is the time period for the AVD? What is AVD?
AVD = alternate valuation date
Time period = 6 months after death
What is the difference between trustor and trustee?
Trustor is the person setting up the trust
Trustee is the person who has the control
What is the whole purpose of a trust?
The purpose of a trust is to separate the person who has control (trustee) from the person who gets the benefit (beneficiary)
What are the 2 types of beneficiaries?
- Income beneficiary
2. Remainderman
What are the qualifications for a Valid Express Trust? (BRATS)
- There has to be a beneficiary
- There has to be reasonable intent
- There has to be assets
- There has to be a trustee
- There has to be a specified life
Between Private Trusts and Charitable Trusts, which has the longer life?
Charitable Trusts because charitable trusts can live forever (perpetuity) while Private Trusts cannot live forever (they last until they’ve served their purpose)
What is the length of a private trust? What does “life in being mean”?
“the length of a life in being plus 21 years”
Life in being means the remaining life of the person who is in existence when the will takes effect
What are the 5 types of Trusts?
- Inter vivos (alive)
- Testamentary (after death)
- spendthrift trust (prevents the beneficiary from selling the trust)
- resulting trust (fails to meet the requirements of an express trust)
- cy pres trust: fails to meet the requirement of a charitable trust
