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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 23128
Experience:  14 yrs estate law, real estate. Wills/Trusts/Probate
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A person died in 2013 leaving an estate of approximately $1

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A person died in 2013 leaving an estate of approximately $1 million. Most of the beneficiaries are charities except for 9 individuals receiving $5,000 each. From the date of death until the date of disbursements of the assets to the beneficiaries, the estate earned about $6,000 in dividends, interest and capital gains. We would rather have the estate pay the tax on the earnings than to issue K-1 forms to the beneficiaries showing their share of the earnings. The trust document is silent regarding this matter. Is it acceptable for the estate to pay the tax on the earnings rather than the beneficiaries?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Barrister replied 1 year ago.
Hello and welcome! My name is XXXXX XXXXX I will try my level best to help with your situation or get you to someone who can.
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Is it acceptable for the estate to pay the tax on the earnings rather than the beneficiaries?
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Yes, actually since the trust is silent on the matter, it would have to report the dividends as income and pay taxes on them. The trustee of the trust wouldn't have the legal discretion to just increase the gifts that the grantor made to the beneficiaries. Unless the trust stated that the beneficiaries are to get the income from the trust assets too, then they don't. So if they were to get $5K each, that is all they get. Whoever is the remainder beneficiary of the trust would then get the balance of the dividends added to their "pot" once the taxes were taken out and paid.
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Thanks.

Barrister

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Barrister, Attorney
Category: Estate Law
Satisfied Customers: 23128
Experience: 14 yrs estate law, real estate. Wills/Trusts/Probate
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