Trusts

Question 1

The fiduciary (or one of the joint fiduciaries) must file Form 1041 for a taxable domestic trust that has (3 situations):

Answer 1

1 any taxable income for the tax year
2. gross income of $600 or more (regardless of taxable income), or
3. a beneficiary who is a non-resident alien

Question 2

HEMS represents the ability to take as-needed distributions from the trust for

Answer 2

Health, Education, Maintenance, and Support.

Question 3

A trust may qualify as a simple trust if it meets these 3 things:

Answer 3

1. All income must be distributed currently,
2. Funds cannot be paid, permanently set aside, or used for charitable purposes, and
3. Amounts allocated to the corpus of the trust cannot be distributed.

Question 4

Complex Trusts (4 things):

Answer 4

Are NOT required to make distributions (they can accumulate income)
May have a charitable beneficiary
May distribute principal during the tax year
Have a personal exemption of $100 (2023)

Question 5

In a 2503(b) trust, income must be distributed not less frequently than ____

Answer 5

annually

Question 6

With an A-Trust (power of appointment trust), the surviving spouse is given a _______power of appointment to receive distributions from trust income and corpus.

Answer 6

general

Question 7

An inter-vivos trust is characterized by the following: (3)

Answer 7

Established and funded during the grantor’s lifetime and takes effect immediately.
Funds pass outside the will and the probate process, saving costs & time.
Title to property inside is held in the name of the trust.