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645 Election for Trusts on Form 1041

What are the advantages and disadvantages of doing this? The Trust will be open many more than 2 years because one of the beneficiaries of the Trust is a Special Needs situation. Thanks! 

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4 Replies
M-MTax
Level 11

645 Election for Trusts on Form 1041

One primary advantage is that you can treat a qualified revocable trust as part of an estate and only file one Form 1041 (for the estate) and choose a fiscal year rather than a calendar year for the filing.

 

One primary disadvantage is that this election is typically NOT for an executor to make without professional guidance. This is NOT a DIY endeavor.

 

Here's a LINK for more information.

645 Election for Trusts on Form 1041

Thanks. I had actually previously read the article that you provided in the link. My father passed away in September 2024. He had a Revocable Trust which of course is now is Irrevocable. I am the Trustee and will probably hire a CPA but I am just trying to understand everything. For more than 40 years I have always done my own personal and business taxes (LLC taxed as a Partnership, Form 1065) without any problems but I realize this might be more complicated. My understanding is that a Trust can be Simple one tax year and Complex another. I think for the 2024 tax year it is a Simple Trust because principal isn’t being distributed and the only activity is the inherited IRA distribution passed to the beneficiaries via a K-1. 

Am I correct to assume that if a 645 Election is taken then the “Descendent’s Estate” snd “Simple Trust” boxes would be checked in  A?  

 

I know that Election 645 is irrevocable so in future tax returns would the 645 Election not be checked because it’s already been taken? 

 

After the Estate settles but the Trust still exists is the Decedent’s Estate box on future tax returns no longer checked?

 

All of my father’s assets are in the Trust so in essence his Trust is his estate. If all of my father’s assets before he died were not in the Trust and the 645 Election was not taken would two 1041 returns have to be filed, one for his Estate and one for the Trust? 

 

Thank you! 

M-MTax
Level 11

645 Election for Trusts on Form 1041

If all of the assets are already in the trust, there's not much to recommend a 645 election. I mean, you wouldn't be filing a 1041 for the estate since everything is in the trust already.

 

 

645 Election for Trusts on Form 1041

Thanks! That makes sense. The only thing in my father’s Estate is debt. The Trust is in Florida and my father’s Estate (Trust) lawyer told me that the creditors can’t go after assets in his Trust. When my father passed away his lawyer filed a “Notice of Trust” in the Florida county he lived in. 

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