passive trust - income & expenses

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date passive trust - income & expenses ps56k 03-04-2010  Re: passive trust - income & expenses PeterL 03-04-2010  Re: passive trust - income & expenses dapperdobbs 03-04-2010  Re: passive trust - income & expenses Don 03-04-2010  Re: passive trust - income & expenses Cam 03-04-2010  Re: passive trust - income & expenses HW \"Skip\" Wel... 03-04-2010  Re: passive trust - income & expenses ps56k 03-06-2010  Re: passive trust - income & expenses JoeTaxpayer 03-07-2010  Re: passive trust - income & expenses ps56k 03-07-2010  Re: passive trust - income & expenses Cam 03-07-2010
Posted by ps56k on March 4, 2010, 1:57 am My wife's paents each died within the last couple of years. They had some real estate properties in a "trust" - we have no other info as yet. There are 5 kids named and equally shared in the trust. It appears that we now have been informed that we have to add some income/expenses (details coming) on a Schedule E. Just looking for some basics on this "trust" since we have not really participated by receiving any income or paid out any expenses. ? -- ---------------------------------- "If everything seems to be going well, you have obviously overlooked something." - Steven Wright Posted by PeterL on March 4, 2010, 12:34 pm > My wife's paents each died within the last couple of years. > > They had some real estate properties in a "trust" - we have no other info as > yet. > There are 5 kids named and equally shared in the trust. > > It appears that we now have been informed > that we have to add some income/expenses (details coming) > on a Schedule E. > > Just looking for some basics on this "trust" > since we have not really participated > by receiving any income or paid out any expenses. ? > > -- > ---------------------------------- > "If everything seems to be going well, > you have obviously overlooked something." - Steven Wright Informed by who? On their deaths the heirs should receive a copy of the trust. If a lawyer is handling this you need to have a sit down and go over the trust. Posted by dapperdobbs on March 4, 2010, 3:07 pm > [snip] > It appears that we now have been informed > that we have to add some income/expenses (details coming) > on a Schedule E. > [snip] The Sch_E is part of the estate filing, and I *think* will be handled within the trust or by the executor if there are current bills due. You've just been informed that when the estate is settled, the inc/exp will appear on Sch_E, and this will be part of your tax filing responsibility (since the estate is, I *think*, "yours" as of the date of death, and inc/exp begin to accrue). I'm not an expert on this at all, and if there is real estate, that may or may not be sold as part of the settlement. I'm just trying to give you some clues, and I'm sure an accountant would cover it in five words or less, and an attorney in 5,000 words or more. Call the attorney and ask. Posted by Don on March 4, 2010, 4:12 pm > My wife's paents each died within the last couple of years. > > They had some real estate properties in a "trust" - we have no other info as > yet. > There are 5 kids named and equally shared in the trust. > > It appears that we now have been informed > that we have to add some income/expenses (details coming) > on a Schedule E. The settlement of estates is prone to abuse and overcharging by providers of various services. If any substantial amount of money is involved, you should perhaps hire your own lawyer to explain these matters to you and to look over what is being done by the executor. Posted by Cam on March 4, 2010, 4:19 pm > My wife's paents each died within the last couple of years. > > They had some real estate properties in a "trust" - we have no other info as > yet. > There are 5 kids named and equally shared in the trust. > > It appears that we now have been informed > that we have to add some income/expenses (details coming) > on a Schedule E. Real estate either generates income, which goes to the trust and is reported to the IRS or loses money which becomes a tax deduction for the trust holders (beneficiaries). There is nothing particularly mysterious about the Schedule E tax form. You can't alwasy deduct the full expense in the year it happened. Deciding how many years to expense something (amortize) is a bit tricky. I couldn't tell you how many year to amortize a toilet or a water heater. The good news is there is no Social Securiy or Medicare tax to pay (unlike your job). Property is depreciated and throws off phantom losses. There is eventual recapture, but you get to keep your money meantime and it is far less than 100% (around 25% depreciation recapture). My accountant does three rentals for me, plus my taxes, for around $500 and I live in a high expense area. I'm guessing you use a property manager (somebody has to be looking after this) and s/he should work with your accountant to do the taxes. Like everybody else, my accountant has data entry clerks and software to do the heavy lifting. Similar Threads Posted qualifying education expenses for I bonds? August 22, 2007, 5:08 am Do "total returns" include fund operating expenses? May 11, 2007, 4:57 am Would Passive Investing Exacerbate Excessive Executive Compensation? 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