Professional trust management services can help you eliminate the frustration of dealing with confrontations between beneficiaries and understanding of rules and regulations that often overwhelm those trying to administer a trust for friends or family members. Some certified public accountants can provide a comprehensive solution by both offering accounting and tax preparation in addition to providing management duties. CPA Chris Wynkoop has over 30 years of experience as a trustee, executor and expert witness.
After a trust is setup by a grantor accounting must be done at least on an annual basis to reflect the beginning balance, changes in activity and ending balance
Trust tax returns
After a trust is setup by a grantor accounting must be done at least on an annual basis to reflect the beginning balance, changes in activity and ending balance.
Our service includes:
- Managing individual and family trusts
- Transferring daily, monthly or quarterly disbursements directly to your bank or other accounts
- Generating regular statements to reconcile your trust statements
Working with an experienced accountant who offers professional trust management services ensures of properly setting up, managing and disbursing finds per the requirements of the Trust documents. A trust accountant records a trust’s cash receipts, payment and periodically prepares and complete financial statements that comply with generally accepted accounting principals, regulatory requirements and industry practices and trust laws. Complete trust records are:
- Financial statement
- Statement of profit and loss
- Statement of trustee’s equity
Trust accounts come with a different set of reporting rules. Proper record keeping is necessary to satisfy the legal requirements of reporting to the beneficiaries and courts, as necessary.
Trust Tax Returns
After trust accounting a complete a tax return must be prepared on an annual basis. Some income may pass through to the beneficiaries, and the Trust may be responsible for the payment of other tax liabilities. We are experienced in both areas and conveniently combine the services.
How trust fund earnings are taxed
Not all trust funds are the same. Trusts are taxed differently depending on the type. The two types of trusts are simple and complex.
In some situations, certain taxable income may be passed through to the beneficiaries to recognize on their individual income tax return. This means the beneficiary pays the income tax on the taxable income amount rather than the trust. Also, the Trust may recognize certain taxable income items and the Trust will pay income tax accordingly.
If your trust is revocable, it may qualify as a Grantor Trust and the IRS will ignore it for tax purposes. This means any income the trust property will be recognized by the grantor. If the trust is irrevocable, the IRS will treat it as a separate taxpayer. This means the trustee must file a separate tax return from it—Form 1041.
There is no one-size-fits-all or cookie-cutter plan. It is best for your trust accountant to analyze your individual trust and situation to answer questions and make informed decisions that are best for you and your family.