Have Tax Questions? Ask a Tax Expert for Answers ASAP
what kind of trust is this.
Clue: Most people have revocable trusts and then after they pass away,the trust becomes irrevocable.
However there are other forms of trusts.
Is this trust irrevocable now?
AND I udnerstand that you have an agreement, but do the trust documents contain language pertaining to this.
The handling of this will vary depending on if the trust is now irrevocable or not.
One final question. Is this the closing activity of the trust. Will this be the final 1041 for the trust or will the trust continue to operate distributing to beneficiaries?
My attempt was to find some way you could do this. However you will not be able to do it the way you suggest.
If the trust issues the check to a charitable organization, then the trust technically includes this on the form 1041 and changes the distributable income. (it is reduced).
I understand what you are trying to do.
Why not try this solution.
Since you all agreed to how the distributions to beneficiaries was to be handled, but minus the charitable contribution, you main concern seems to be that everyone fulfills their obligation.
Why not have the distribution to beneficiaries be made without regard to the charity, and to have the distributions go to an escrow account. The administrator of the escrow account can distribute the monies according to the agreement you have.
Under IRS ordering rules and accounting rules, the money is available legally to each of you when it goes to the escrow, because it is constructively received.
Then each person gets their distributions minus the amount that goes to a charity. The donation is made in their name. Think of it in the same way one might for a closing on a home.
in that way each person can take the charitable donations.
You have essentially a partnership agreement.
Draw up a formal document that each of them signs. The escrow, like a trust can have terms assigned to it before money is released.
Make the donation or allow the administrator to pay it out according to the terms.
In order to get the donation on your tax return, you need to pass this money into your possession first. You have to receive it. If the trust makes the donation, as an irrevocable trust, the trust subtracts it from income.
altgernatively you can get the probate involved. If tow of hte three parties do not want to make the donation, there is contestibility at probate.
best of luck to you in this. I woudl like to know how you finally resolve this later.