It will be clearly noted in several ways for tax season. Also there will be 7 total transactions for the 2 month or so life span of this Trust bank account before closing.
1) Opened with $1000 cash
2) Received Life Insurance Benefit
3) Beneficiary 1 check clears for 25% (per disbursement directives in Trust document)
4) Beneficiary 2 check clears for 25% (per disbursement directives in Trust document)
5) Beneficiary 3 check clears for 25% (per disbursement directives in Trust document)
6) Beneficiary 4 check clears for 25% (per disbursement directives in Trust document)
7) After all checks clear and account back at $1000, I as the Trustee will close account taking $1000 back as cash to deposit in my account.
The only issue is can I make this clear enough to the IRS that these are life insurance beneficiaries via the 1041 form and the issued K-1 forms. If I can, they should be tax exempt.
