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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?

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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.

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1 Reply
Highlighted
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