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SandC
Level 1

Final Trust Year - Transfer of all assets

We have a family trust where my mother was able to use all income and principle for support.  Last year that Trust made about $8000 in dividend income and after  that all the assets (2 mutual funds) were transferred to her taxable account  for her use.  There is nothing left in the Trust account. I have indicated on the return that this is the final return. 

- We plan to pay the taxes with on the $8000 of dividend income with the 1041 form as we have in the past.

- Do we need to document that the assets have been transferred to the beneficiary?

Thanks!

2 Replies
tagteam
Level 15

Final Trust Year - Transfer of all assets

You do not technically have to report transfers of trust corpus (principal) but it is generally a good practice since beneficiaries need to be aware of the basis of assets that have been distributed to them.

DianeC958
Expert Alumni

Final Trust Year - Transfer of all assets

No, there is nothing for the tax return that needs to show that the assets were transferred to the beneficiary.  Once you have filed the final return for the trust it will be closed.

 

Please have the trust provide a statement to the beneficiary that the transfer of the mutual funds was an " in-kind exchange" and not a sale.  Therefore, there are no capital gains or losses on the transfer.

 

It is always a good idea to provide the beneficiary the cost basis in the mutual funds.

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