Discussion:FILING REQUIREMENTS FOR GRANTOR IRREVOCABLE TRUST
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Discussion Forum Index --> Advanced Tax Questions --> FILING REQUIREMENTS FOR GRANTOR IRREVOCABLE TRUST
Discussion Forum Index --> Tax Questions --> FILING REQUIREMENTS FOR GRANTOR IRREVOCABLE TRUST
| 30 October 2009 | |
| I have a trust that was set up 20 years ago for medicaid planning. Never filed for tax i.d. # and never filed return.
Client now needs i.d.# for check cashing purposes. Lawyer says it is an irrevocable, grantor trust. I believe I can file for a number and not file a return as all income goes on grantor's(still living) return. Thanks! | |
| 30 October 2009 | |
| There is a major difference between what you can do and what you should do. Consult the attorney once more and determine what records will be sufficient for the trust to actually accomplish its purpose. (Matter of state law...IRS could care less) Real hard to protect assets without a clue what they are. If grantor is a trustee there are no filing requirements. If grantor is not a trustee the requirements are most easily met by filing or at least preparing a return. Either way a set of books is essential. | |
| 1 November 2009 | |
| READ THE TRUST DOCUMENT!
If it's an irrevocable grantor trust it requires an EIN. A 1041 is partially completed. Info passes to the grantor by a statement attached, not the K-1. If it's a revocable trust, then the income passes directly to the grantor. The trust doesn't require a separate EIN. You are saying one thing and describing another. | |
| 4 November 2009 | |
| Grantor was a trustee but is currently being removed for better protection from medicaid. I read the trust. It appears to read as the attorney is defining it:
irrevocable grantor trust. So I guess I'll get a tax # and file a 1041 for the first time, even though the trust was established 20 years ago. I just don't want to open a can of worms looking for past years that were never filed. | |
| 4 November 2009 | |
| There would be no returns required for the years grantor was trustee. Again. Filing is far less important than ascertaining the records necessary to protect the assets. | |
| 25 November 2009 | |
| Thanks for everyones input. I filed for the I.D. number and on the IRS letter referencing the number
was a request for 20 years of tax returns to be filed. In talking with the IRS they are stating that if it is a grantor trust it must also be a revocable trust and a letter stating such and that no returns were needed and that all income was reported on 1040 will be sufficient. I have talked to 2 lawyers and they both feel the IRS person I talked to is wrong and that the trust is irrevocable and a grantor trust. That being said I will respond with a letter that no returns were due previously as it is a grantor trust and grantor was trustee. I think for 2009 I will file a partially completed 1041 with a statement that income is on 1040(no K-1) for the first time since the grantor is no longer a trustee. Do I have this right? Talked to the lawyer and he feels this is good and assests are protected. Thanks. | |
| 25 November 2009 | |
| Thanks for everyones input. I filed for the I.D. number and on the IRS letter referencing the number
was a request for 20 years of tax returns to be filed. In talking with the IRS they are stating that if it is a grantor trust it must also be a revocable trust and a letter stating such and that no returns were needed and that all income was reported on 1040 will be sufficient. I have talked to 2 lawyers and they both feel the IRS person I talked to is wrong and that the trust is irrevocable and a grantor trust. That being said I will respond with a letter that no returns were due previously as it is a grantor trust and grantor was trustee. I think for 2009 I will file a partially completed 1041 with a statement that income is on 1040(no K-1) for the first time since the grantor is no longer a trustee. Do I have this right? Talked to the lawyer and he feels this is good and assests are protected. Thanks. | |
| 25 November 2009 | |
| Tell the IRS person to take a look at Pub 1635. A trust CAN be BOTH irrevocable and a grantor trust.
[start]Revocable/Irrevocable Trust: An irrevocable trust is a trust, which, by its terms, cannot be modified, amended, or revoked. For tax purposes, an irrevocable trust can be treated as a simple, complex, or grantor trust, depending on the powers listed in the trust instrument. A revocable trust may be revoked and is considered a grantor trust (IRC ยง 676). State law and the trust instrument establish whether a trust is revocable or irrevocable. If the trust instrument is silent on revocability, then most states consider the trust revocable.[end] | |
| 25 November 2009 | |
| Nope. If you are going to file a grantor trust return you should do it correctly. While not considered authoritative, the 1041 instructions for filing and the various optional methods are worth reading. | |
