Irrevocable trust income

[JJPhare]

My mother in law died July, 2025. She had an irrevocable trust with several CD's that will mature later this year. The bank indicates that they will only issue one 1099-INT under the trust's EIN.  I believe that I should file normal 1040 for income (SS,CD interest etc) earned prior to her passing but how is the interest reported after her death. My wife is the trustee & sole beneficiary.

[M-MTax]

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@JJPhare wrote:

.....how is the interest reported after her death.

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On Form 1041 assuming the interest exceeds the threshold for filing.

See https://www.irs.gov/instructions/i1041#en_US_2024_publink1000285942

[JJPhare]

My wife seems to think that the interest becomes part of her income since the trust terminated at death of her mother.

If the one 1099 includes interest pre and post death, how can she indicate that part of the interest is hers? 

[M-MTax]

It depends upon the terms of the trust, which needs to be read carefully. The majority (at least the standard) become irrevocable upon the death of the grantor (your wife's mother), in which case the trust is a separate entity and would file its own tax return (1041).

[M-MTax]

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@JJPhare wrote:

If the one 1099 includes interest pre and post death, how can she indicate that part of the interest is hers? 

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Report the part that is not hers as having been received as nominee for the other party (taxpayer).

[JJPhare]

It is already an irrevocable trust. With only one 1099, are the amounts then pro-rated (pre and post death) ?

How is it reported since the 1099 has one amount but a lesser amount is shown on the 1041.  Thanks 

[M-MTax]

If the trust actually terminated upon her death as per the terms of the trust, then there would be a split between the trust and your wife (sole beneficiary). 

Post death, interest (any income) earned would be reported by your wife on her return (I presume a joint return with you).

[JJPhare]

How is that shown since the 1099 INT has the entire amount but split on 2 different forms? Can a note of explanation be attached to the return? 

[M-MTax]

You would enter the entire amount on the return for which the 1099 was issued and then indicate that a portion of that amount was received as nominee for the other party.

See https://www.irs.gov/instructions/i1099gi#en_US_2025_publink1000286907