Trusts and Estates: Determination of Beneficiary's Share of Taxable Income

Question 1

to create an express trust

Answer 1

Neither a remainderman nor a successor trustee is needed

A remainderman refers to the person who gets the remainder of the items in a trust

Question 2

if you retain the power to revoke the income interest and the remainder interest

Answer 2

You will be taxed on trust income

Question 3

Reversionary trust income

Answer 3

is taxed to the grantor

Question 4

Distributable net income (DNI) is

Answer 4

the taxable income of a trust or estate computed without the distribution deduction, personal exemption, and certain other adjustments

Interest Inc + Dividend Inc - Fees

Question 5

The accounting income of a trust is

Answer 5

the amount an income beneficiary is entitled to receive from the trust

Accounting income includes both taxable and nontaxable items of income

Allocated to Corpus is excluded

Question 6

A Crummey trust

Answer 6

is a “safe harbor” rule that allows the annual gift tax exclusion on gifts to a trust

he gift of a future interest provision does not apply to gifts to a Crummey trust if trust assets go to the beneficiaries on or before age 21

Question 7

Difference between per Capita and Per Stirpes

Answer 7

Per Capita = Divided evenly among all remaining beneficiaries (children and grandchildren)

Per Stirpes = Just the Children split it evenly

Question 8

What is allocated to Trust Principal and Trust Income

Answer 8

Principal = Settlement claims for trust property, Stock Splits

Income = Dividends, Royaltys, Interest