Do I need to prepare tax returns for both trusts or do I just establish the Bypass Trust and show the Survivors income as her personal income?

[e-ward-bell]

if a residence was sold and the proceeds will now split into (2) trusts, a Survivors Trust and a Bypass Trust. Do I need to prepare tax returns for both trusts or do I just establish the Bypass Trust and show the Survivors income as her personal income?

[RichardG · Accepted solution]

The Survivor's trust and the Bypass are separate trusts, and each require a separate tax return.  Depending on the terms of the Survivor's trust, it may be a grantor trust with the surviving spouse treated as the owner of the trust assets.  I suggest consulting your estate planning attorney for an opinion on this matter.