People create trusts for a multitude of reasons, mostly to assure that their assets are used in a matter as they have laid-out. This could include providing financially for a spouse until his or her passing, providing for grandkids’ college needs or just making sure that the assets are distributed correctly to their loved ones. Trusts can be complex legal documents. Once the grantor dies, all of the provisions contained in the document must be followed. It is the trustee’s job to make certain all of the provisions of the trust are carried out.

If you now have found yourself as a trustee for a trust, you must take your new job very seriously. You now have a legal liability to all the beneficiaries of that trust. The trustee is simply the person in charge of handling the business of the trust. This may include such things as making distributions of money or assets to beneficiaries; managing investments; renting or selling real estate owned by the trust; and any other financial dealing.

The bookkeeping and tax return preparation are of utmost importance for trusts. The trustee will need to maintain a proper accounting of how assets were distributed in case there was ever a question as to if the intentions of the trust were carried out.

Preparing the annual tax return for the trust is also the responsibility of the trustee. It is very important that the firm, who prepares your trust tax return, makes sure all the accounting and tax requirements of the trust document have been met. It is the trustee’s legal responsibility to make sure this done. So, as a trustee of a trust, you need a firm you can depend on and place confidence in to help you make sure everything is done right.

Cruise & Associates is a Nebraska-based accounting firm that has been preparing trust tax returns for over 20 years and is a leader in trust income tax return preparation.

In order to properly prepare a trust tax return we must…

  • Thoroughly read the trust document to determine how the trust should be treated from a tax standpoint
  • Prepare the 1041 trust tax return, with K-1’s
  • Determine if the income tax of the trust needs to be paid by the trust or the beneficiaries
  • Determine if all the distributions of the trust are meeting the rules outlined in the trust documents
  • Review the accounting and bookkeeping of the trust to make sure it meets the guidelines of the trust document

Duties of the Trustee include…

If you are named as the trustee, you need to act quickly to make certain the trust is functioning correctly. These duties may be as simple as making sure real estate and personal assets are secured to managing investment accounts. You will be held to a conservative standard. Your actions should assure that the trust’s assets are managed as prudent people would handle their affairs. Remember the trust’s assets are not your assets. You are simply the caretaker until all the assets of the trust have been distributed to the beneficiary.

Some of the things you will want to take care of immediately include…

  • Obtaining a Tax Identification Number for the trust
  • Opening a bank account for the trust
  • Collecting and managing current income and other assets
  • Paying Creditors
  • Notifying all heirs, beneficiaries, charities, etc. of the trust
  • Making required and discretionary distributions
  • Filing and signing the required tax returns
  • Paying all income tax of the trust

Here’s what you get…

  • Personalized face-to-face interview with your dedicated tax professional
  • We will show you potential deductions to limit your tax liability for next year
  • Free year-round questions; we don’t send a bill every time you call
  • Our professionals will always return your calls and e-mails promptly
  • Our goal is to ensure the Trust and the Beneficiaries will always pay the least amount of tax legally possible because of our never-ending commitment to know the laws
  • Our goal is to make certain you never pay a penalty, due to our strict adherence to deadlines
  • You will always know in advance what our fees will be, so there aren’t any surprises

The information contained in this article is not intended to constitute legal, accounting, tax, investment, consulting or other professional advice or services. For specific information that applies to your circumstance, you should consult a qualified tax advisor. In accordance with IRS Circular 230 Disclosure, and to ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained in this article was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2) promoting, marketing, or recommending to another party any tax-related matters addressed therein.