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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Estate Law
Satisfied Customers: 114099
Experience:  Experienced in Trust and Succession Law, including Louisiana Laws
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I am a trustee on an account. There were 2 IRA's left to the

Customer Question

I am a trustee on an account. There were 2 IRA's left to the trust totally 150K. Total size of trust is 750K. The trust has bequests for small amounts to be paid to the children etc. The residual after expenses at 80% - 20% is going to two 503C charities. How is this treated on accounting.
1) send k-1 to charities for the amount allocated to them by IRA?
2) Pay total amount to charities and write off a charitable contribution on the trust tax return?
3) Pay the tax out of trust and send residual to charities.
Please advise. I have had two accounting firms give me different answers and I don't want to be liable for a costly mistake with the IRS.
Submitted: 1 year ago.
Category: Estate Law
Expert:  Law Educator, Esq. replied 1 year ago.

Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

If the charities are beneficiaries of the trust, and this is not merely a donation, then a K-1 beneficiary form is filled out with the payment to the charity. It does not mean the charity pays taxes, it is just a designation from the trust regarding a payment to beneficiary and the charity in this case is indeed a beneficiary. Since the charity is a non-profit, when they get the K-1 it does not mean anything, since they do not pay taxes on the amount.

You do not pay tax on the amount donated to them from the trust, as they are a named beneficiary they get their share and the K-1 to show it went where it was supposed to go.

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