Reply to Question 1: The irrevocable trust was created by a will dated 1983 and back then, then expenses were not significant, and it was 'family'. It was considered that family members will sacrifice time and effort to maintain the land / farming legacy. Farming has changed in 42 years requiring active daily management. Usually, average 2 hours a day. Just to be clear, the actual crop share inputs and things like property taxes are paid by the Trust. Its the administrative / office / education costs / inspection trips / computers / chain saws/ that I am absorbing. I will continue to absorb these costs as due to family dynamics, they will not be paid. The Will and Trust documents are clear, there is no mention of repayment of such expenses. Several Trust beneficiaries are very much OK with that and will not support reimbursement. What I am seeking the best way to at least claim these documented overhead costs of being a Trustee on my taxes.
I wear several hats in the Trust; I am a Trustee, I am one of 6 beneficiaries of annual equal Trust disbursements, I am farmer (USDA), and a landowner of Trust cropland USDA and county / state records.
Question 2: If I was not a Trustee, the Trust documents state that the surviving beneficiaries are to elect a new replacement. However, the most likely replacement Trustee has already said they would have to enlist a Professional Fam management company which normally charges 8% of gross receipts.
Bottom line, you are not going to fix the Trust as its all wrapped around family dynamics and fractions. My only goal is how to best file tax wise to offset my management expenses and its cloudy / messy due to the many hats I wear. For example if I file as farmer on schedule F, my income is only $1.00, my actual expenses will always be much more than my $1.00 income and the IRS will say I will never make a profit and I agree. But I do not think I can add my annual beneficiary income (on a Schedule K) as farm income. The Trust functions as a true 'pass through' entity.
