Direct Transfer Between Trust Accounts

[hntrust]

I am trustee for two trusts with the same beneficiary. The trusts hold identical mutual funds, ETFs, and cash. The custodian is Schwab. The trusts documents allow trusts to be merged. I would like to consolidate the accounts for ease of administration, so I only have to file one tax return, one accounting, etc. If I do a direct in-kind transfer from one trust to the other, does that trigger a taxable event? No assets are being sold, only transferred. What instructions should I give to Schwab?

[PatriciaV]

In general, if multiple trusts have similar terms and neither the trust agreement nor state law prohibit merging the trusts, then the trusts can usually be combined into one. Under section 417 of the Uniform Trust Code (UTC) a trustee, after giving notice to the qualified beneficiary, may combine two or more trusts into a single trust, “if the result does not impair rights of any beneficiary or adversely affect achievement of the purposes of the trust.”

The most likely instructions to the custodian would be to "merge" the trusts. However, the trustee should consult with the attorney who set up the trusts to confirm the merger is appropriate and legal.

See also UNIFORM TRUST CODE, page 76.