So last year and currently the Trust is paying the assisted living directly from corpus. No K-1 was issued to this Beneficiary for the 2024 tax year. The Beneficiary has very little income, I think about $10,000 per year from Social Security. Next year the corpus is going to run out so the assisted living facility will have to be paid from her 25% portion of the Trust Inherited IRA. My understanding, and tell me if I am wrong, if next year I continue to pay the assisted living facility directly for her benefit from the Inherited IRA it would get taxed at the 37% tax rate because the money stayed in the Trust since it was never given to her via a K-1? However if next year I give her Power of Attorney, let’s say as an example $5,000 per month from the IRA for assisted living ($60,000 for the 2026 tax year) are you saying that I can issue her a K-1 for the IRA distribution in 2026 and her Power of Attorney can deduct the assisted living facility cost from her IRA income? Am I correct to assume that for 2024 there was no deduction for the assisted living because it was being paid from corpus and the Trust had no income for this Beneficiary’s share? A total of $105,000 in income was distributed in 2024 from the inherited IRA, $35,000 each, to the other 3 Beneficiaries and K-1’s were issued. Thanks!
