<p>BTW, best case for your tax return is that taxes were paid by the Trust. That way distributions to you are tax-free. (Whether it’s financially advantageous for you or the Trust to pay taxes on Trust assets is too complex an issue for me to address here.)</p>
<p>We did make sure it was all distributed (or paid out in expenses such as the lawyer trying to track down the delinquent payer). Our understanding is that the taxes are pretty high for keeping money in the trust - much higher than our marginal rate.</p>
<p>No good reason. She *always *files an extension on her own taxes so to her this is the norm. We are a bit anal about filing on time so it is not the norm for us.</p>
<p>I would probably be a lot happier in dealing with the situation if it was a rockefeller type trust (value wise) rather than just a few thousand dollars. 
The whole thing is a bit daft.</p>
<p>Surely one can walk away from being a beneficiary of a trust. If the trust really is that small, why not let SIL have it all?</p>
<p>^ If I’m “reading between the lines” correctly, the assets of the Trust are >$100K but the annual distribution to each Beneficiary is <$10K. With a Simple Trust, all income is distributed annually. If it’s a Complex Trust … well then it’s a more complex issue.</p>
<p>"We did make sure it was all distributed (or paid out in expenses such as the lawyer trying to track down the delinquent payer). Our understanding is that the taxes are pretty high for keeping money in the trust - much higher than our marginal rate.</p>
<p>I believe the tax rate is 35% on a trust. I have an accountant do mine. I have him determine which is better from a tax standpoint - keeping things in the trust or distributing it to me.</p>
<p>^ Yes, 35% tax rate on any taxable income over $11,650. Non-taxable bonds made a lot of sense for us. Real estate can be good, because you have some flexibility with expenses (to offset income).</p>
<p>Have your hisband take a deep breath. No deal in filing an extension. I am a CPA. I put myself on extension. We have many clients who go on extension every year. I have seen no difference in who gets audited.</p>
<p>Pay someone to do the trust and get a copy of the complete return. You should know what is going on. The trust rules can be confusing. Pony up the $s for the return (the prep fee is deductible). If you felt like you were charged too much find a different preparer (make sure they are proficient in fiduciary returns). I bet SIL will be glad to be off the hook…nobody enjoys stress.</p>
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I don’t * think* it is $100, but I’m really not sure. It is just complicated. It is all land that has been sold but my FIL financed the buyers as they generally have poor credit so they are paying the “mortgage” to him (well now to the trust). As they have poor credit there are always problems as you can imagine. I think there are 4-5 pieces of land and they were all sold several years ago so some are closer to being paid off than others. The one where the guy walked away was probably the largest and he had been paying for a while (I don’t understand why he walked away). I imagine it would cost a fortune to pay someone to administer this mess. The land that is probably coming back they were thinking of selling the same way (already have a buyer interested - with poor credit) and I am like “just sell it outright even if you get less” My husband and his sister are no spring chickens and I know neither her kids nor mine want to have to deal with this.</p>
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Well it is pretty small. But $6000 a year comes in very handy when you are trying to make your retirement savings last. Especially when you have health problems like my husbands that pretty much eat up his entire federal pension. Heck - he paid $3700 for a single prescription in january. (But we are out of the donut hole now so that prescription was only $280 today - woot).</p>
<p>So I guess I shouldn’t whine. But it is just crazy complicated for an estate that does not involve millions or even $100k (I’d probably moan a lot less in that situation - but we could also afford to pay someone to “handle” it while we ate bon bons and sipped champagne ;)).</p>
<p>Anyway, I feel a lot stressed now with the advice received and the plan is to get an extension, This morning I was STRESSED, as my husband just was all bent out of shape and upset about it and I am not used to him being so tetchy. So thank you all - CC people are the best.</p>
<p>I agree with rhumbob. I’m a long term CPA too and I’ve never seen extended returns get audited more often. Amended returns are subject to a higher audit rate though.</p>
<p>The accountant’s prep fee has to do with the time and complexity; not the value of the trust. Just because the dollars are smaller doesn’t always mean it is a quicker return. Last minute and bad records (maybe your SIL?) = higher fees.</p>
<p>I would wait until you have the K-1 in hand to complete your returns. That number will not necessarily match your distributions. I do not believe/have not seen evidence that the IRS is currently cross-checking 1041 K-1 forms with individual returns. Other CPAs, correct me if I’m wrong.</p>
<p>Getting land title back sounds like a cumbersome process but I’d go through it, get it done, sell it, and get out. Peace of mind is worth a lot, especially the older I get. Good luck!</p>