@lou_renshaw wrote:
I really need to have a CPA help me with this one.
Frankly, what you need is an individual (attorney, CPA, EA, et al) that is experienced in trusts and estates issues to sit down with you and read through the trust instrument itself.
Beyond that, I believe what you would like to do is transfer the principal (aka assets, aka corpus) out of the trust and into your personal account. Whether or not that is possible is dependent upon the language in the trust and the only way to determine that would be to examine the document.
Typically, though, when in-kind distributions are made, the beneficiary of the trust takes the trust's basis in the property; there is no gain recognition until the beneficiary disposes of the property in a taxable transaction. After the distribution, in this instance a mutual fund, the beneficiary would own the asset outright and be responsible for reporting any income generated by the asset in his/her personal account.
Finally, I would again urge you to seek professional guidance in this matter. Since you are purportedly the sole trustee and sole beneficiary, then depending upon the authority and powers granted to you in the trust, you may actually be able to treat the trust as if you are the owner thereof (aka like a grantor trust) and essentially bypass transferring the assets (i.e., report the income on your own individual income tax return).
