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Anonymous
Not applicable

Simple or Complex Trust?

I have another trust return question.  Complex or simple?  There is no time limit spelled out in the trust docs as to when the monies need to be distributed between the beneficiaries.  We distributed some money in 2013 but not all of it.  Can I call it simple?  Are there other considerations?

1 Best answer

Accepted Solutions
tagteam
Level 15

Simple or Complex Trust?

The trust cannot possibly be classified as a "simple trust" unless the trust instrument requires that all income be distributed currently. See I.R.C. §651(a)(1)

A trust qualifies as a simple trust if:

  1. The trust instrument requires that all income must be distributed currently;

  2. The trust instrument does not provide that any amounts are to be paid, permanently set aside, or used for charitable purposes; and

  3. The trust does not distribute amounts allocated to the corpus of the trust.


If the trust instrument gives the trustee the authority to decide whether to distribute some, all, or none of the trust's income, then the trust is a complex trust.

View solution in original post

6 Replies
tagteam
Level 15

Simple or Complex Trust?

The trust cannot possibly be classified as a "simple trust" unless the trust instrument requires that all income be distributed currently. See I.R.C. §651(a)(1)

A trust qualifies as a simple trust if:

  1. The trust instrument requires that all income must be distributed currently;

  2. The trust instrument does not provide that any amounts are to be paid, permanently set aside, or used for charitable purposes; and

  3. The trust does not distribute amounts allocated to the corpus of the trust.


If the trust instrument gives the trustee the authority to decide whether to distribute some, all, or none of the trust's income, then the trust is a complex trust.
ron6612
Level 4

Simple or Complex Trust?

If my mom’s trust agreement just states that all assets after debts are distributed 50-50 to her children after an inheritance is given to grandchildren, is this a simple or complex trust?  The original trust agreement was revocable and it became irrevocable at death. We distributed all assets during the short taxable year and there is nothing left. 

Critter-3
Level 15

Simple or Complex Trust?

The trust doesn't change it's classification  just because it is a final return ... the fact that everything is being or has been distributed in the year it is closed will not make any difference either way.  Just mark the return as final. 

ron6612
Level 4

Simple or Complex Trust?

Final and complex, right?

Critter-3
Level 15

Simple or Complex Trust?

Final ... and the rest is immaterial.

tagteam
Level 15

Simple or Complex Trust?


@ron6612 wrote:

Final and complex, right?


All trusts are complex in their final year since they are distributing corpus.

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