I am the trustee and beneficiary of a QTIP trust. The trust document stated as follows:
"At any time or times during the trust term, the trustee shall pay to or apply for the benefit of the surviving settlor so much of the principal of the trust as the trustee deems proper to pay the reasonable expenses of the surviving settlor for his or her health,. education, support , and maintenance. "
The trust files tax return each year and generates K1. After income tax paid either by QTIP trust or by me, the money left in the trust should be all after-tax money. I use trust fund to pay my expense each month, including mortgage payment. My tax accountant told me that although such money distribution to me has no tax consequence, all the expenses I paid from QTIP trust needs to be reported in the tax return. Is this the case? Do I have to keep a list of the checks that I wrote to pay my expense/bill each month and report such list to IRS when there is no tax consequence involved?
Thanks!
