Trusts

[Janet59]

I am trustee for a trust of a friend.  Her husband pre deceased her and did not have a will.  The only thing in the trust is selling her house which was half her husbands.  In compliance to Texas law I gave each of his 5 children 1/5 of his half upon the sale of the house.  How do I tell TurboTax that?

[M-MTax]

Enter the sale as the sale of investment property just like a stock or bond was sold and issue K-1s to each of the 5 beneficiaries for their share of the gain......if there was any gain.......or loss if the trust had a loss after selling expenses.

[Janet59]

They are not beneficiaries of the Trust.  For the half of the proceeds that belonged to my friend she had 5 different beneficiaries.  The Trust is only for my friend's half.

[M-MTax]

You're doing a return for a trust or an estate? I assume it's a trust but what are its terms? Was the house in the trust and did the trust then sell the house? Who are the beneficiaries of the trust? Is it just your friend?

[Janet59]

It is a Trust & it was made mainly for me, Trustee,  to be able to sell the house & distribute the money to her charities when she died.  Actually, myself & the 5 children of her already deceased husband sold the house together as owners/representative.  They then got 1/5 each of their half & the trust got half in which I divided percentage wise among myself & 4 charities (the beneficiaries) according to the terms of the Trust.

[NCperson]

@Janet59 I am trying to follow this thread and still left confused.

• prior to Husband  passing away, who owed the house?  Trust and Husband? Trust? Husband and Wife? 
• When Husband died without a will, who inherited his half of the house?

[Janet59]

Thanks for your help!

My friend & her husband owned the house together.  He died 14 years ago & did not have a will.  His half of the house under Texas law went to his 5 children after my friend died.  I sold the house & dispersed 1/5 of their dad's half to each of them.  I then followed the Trust & dispersed my friends half to the beneficiaries she chose in the Trust.  

[M-MTax]

It should be pretty simple then; you're one of the beneficiaries as are the charities. You'll probably have to file a 1041-A with the trust return.

[NCperson]

I agree with @M-MTax . The Trust would need to file a 1041 and as part of that filing there will be a K-1 generated for each beneficiary of the Trust.  Each beneficiary would take that K-1 and report it as part of their own tax return. 

Since many trustees are doing these 1041's just once, they are not familiar with them, which increases the risk of error and more headache later.  Might be more hiring a local tax accountant to do it for you - you will live longer!