My cousin setup a reverse mortgage in early 2024 on my Aunt's home and received a lump sum payment in the amount of $275,000 dollars to fund her dementia care. These funds were deposited into a high yield savings account. She passed away in July of 2024. Her house which she solely owned is now the lone asset held by her trust. The house was occupied by my cousin and is now listed for sale so family members (beneficiaries in the trust) advanced the funds to pay back the mortgage/Interest in December.
Questions:
1. A 1099 was issued by the bank for interest earned in her SS #. Should I transfer the income received after her death and report via the trust?
2. Is the interest and fees paid in December fully deductible by the trust?
3. The cousin who remained in the house assumed all bills and was responsible for the cleanout and preparing the home for sale. Is there any impact on the trust accounting for this?
4. Do we need to do a calendar year end return for the trust, or can we do just one final return after the house is sold (providing that its less than one year since her death) ?
Thanks!
