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New Member
posted Feb 19, 2025 12:56:58 PM

Do I really need to add beneficiaries to form 1041 and 1041 Illinois Tax form?

I finished 1041 Federal without beneficiaries without any errors. Then Illinois 1041 is requiring them and I don't know the consequences - There is no inheritance tax so why is it necessary?

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3 Replies
Level 12
Feb 19, 2025 1:09:07 PM

Inheritance tax is not the issue here.

 

You file a 1041 for the Feds if there is income/gain and issue K-1s to the beneficiaries if any of that income or gain is, or has been, distributed to them.

 

Illinois most likely wants the names, addresses, and tax ID numbers to determine whether there are any foreign or out-of-state beneficiaries.

Expert Alumni
Feb 19, 2025 5:46:34 PM

It depends on the type of trust you have.  If your trust is a grantor trust, is does not need to reported either on a state or federal level according to this. Also, if you have a simple trust, the trust terms require all its income to be distributed currently and do not provide for charitable contributions. This requires having a beneficiary to distribute the income.

 

If you have a complex trust,  this permits accumulation of income, charitable deductions. or distribution of principal. Please read this State of Illinois reference for more information on trusts and estates.

 

if you continue having difficulties filing this, complete the return and then print and mail it in. Include a statement that you do not have beneficiaries and that all tax is reported and paid on the entity level. Make sure you know what type of trust you have before you do this.

 

Fiduciary (Trust and Estate)

IL-1041 Instructions

Level 12
Feb 19, 2025 6:02:04 PM

...Include a statement that you do not have beneficiaries and that all tax is reported and paid on the entity level.

 

I would not go as far as stating there are no beneficiaries since a trust without at least one beneficiary is simply not a valid trust (i.e., it's legally deficient).