YOUR TRUSTEE DUTIES (T/G 305) covers the tax, legal, and administrative aspects of classifying a trust as "simple" or "complex," the requirements for managing (and distributing) trust property, accounting for its income, and the "sharing" with beneficiaries taxable, tax-exempt, and nontaxable items. Also covered:

• Overcoming myths: The reality check
• The "30 powers" of all trustees
• Answering Form 1041 questionnaires
• The "Income Distribution" deduction
• Content & preparation of Schedules K-1
• Termination & release from duty

Your Trustee Duties
Book: 305

Table of Content

1.  OVERCOMING THE MYTHS                        1-1

    The “Revocability” Myth                     1-2
    The “Exhibit A” Myth                        1-3
    The “No Probate” Myth                       1-5
    Property Titling Awkwardness                1-7
    The “Outstate” Myth                         1-8
    The “No Hassle” Myth                        1-9
    The “Pure Privacy” Myth                     1-11
    The “QTIP Trust” Myth                       1-12
    The “No Waiting Time” Myth                  1-14

2.  HOW TRUSTS REALLY WORK                      2-1

    Like a “Bonded Warehouse”                   2-2
    Role & Qualifications of Trustor            2-5
    Limitations on Trust Property               2-6
    Preferred Types of Property                 2-8
    Trustee Qualifications                      2-9
    Trust Instrument:  General Contents         2-11
    Meaning of “Power of Appointment”           2-13
    How Trustees Are Weakened                   2-15
    Check Your Trust Law                        2-16
    Uneconomical Trusts                         2-18

3.  LEGAL DUTIES OF TRUSTEE                     3-1

    Beware of Covetous Attorneys                3-2
    Compact Edition of Trust Law                3-3
    Digest of Prescribed Duties                 3-5
    Avoid Conflicts of Interest                 3-7
    The “Prudent Person” Standard               3-8
    Many Trustee Powers                         3-10
    Specific Statutory Powers                   3-11
    Compensation for Services                   3-13
    Breach of Trust Actions                     3-15

4.  DISSECTING THE CONTRACT                     4-1

    Photocopy the Original                      4-2
    Prepare Table of Contents                   4-3
    Clarify Name of Trust                       4-4
    Article I:  Example Styles                  4-6
    Disregard During-Life Provisions            4-8
    The After-Death Paragraphs                  4-10
    Scope the Trust Estate                      4-12
    Any Generational Skips?                     4-14
    Enshrine Your Powers                        4-15

5.  GETTING DOWN TO BUSNESS                     5-1
    
    Verify Payment of Transfer Taxes            5-2
    Apply for Trust Tax ID                      5-4
    Open Checking-Only Account                  5-5
    Collect All Monetary Assets                 5-6
    Open Investment Account                     5-8
    Plan Property Rearrangement                 5-9
    Register Beneficiaries & Preferences        5-11
    Dispose of Outstate Property                5-14
    Stabilize Your Modus Operandi               5-17
    Set Up Books of Account                     5-19
    
6.  INTRODUCTION TO FORM 1041                   6-1
    
    Head Portion of Form 1041                   6-2
    Type of Entity Checkboxes                   6-4
    Simple vs. Complex Trusts                   6-6
    General Format, Page 1                      6-7
    Income Distribution Deduction               6-9
    Exemption Amounts Compared                  6-11
    Tax Rate Bands Compared                     6-12
    What If There’s Loss?                       6-13
    More Checkboxes & Questions                 6-14
    Any Wages Assigned?                         6-16
    Foreign Accounts & Trusts                   6-17

7.  SOURCES OF TRUST INCOME                     7-1

    There Are 8 Sources                         7-2
    Interest & Dividend Income                  7-3
    Use Schedule B: Form 1040                   7-5
    Directly Owned Real Estate                  7-6
    Indirectly Owned Real Estate, Etc.          7-8
    Transactional Gains & Losses                7-9
    Business & Farm Income                      7-11
    Three “Heavy Hitters”                       7-13
    Nontaxable Income                           7-14

8.  ADMINISTRATIVE DEDUCTIONS                   8-1

    Overview of Deductions                      8-2
    Interest Paid on Trust Debt                 8-3
    Deductible Taxes Limited                    8-5
    Fiduciary Fees                              8-6
    Charitable Contributions                    8-7
    Applicability of Schedule A (1041)          8-9
    Legal & Accounting Fees                     8-11
    Other Deductions Not Subject                8-12
    Determining the 2% Floor                    8-14
    Expenses Affected by 2% Floor               8-16
    Adjusted Total Income                       8-17

9.  THE DISTRIBUTION DEDUCTION                  9-1

    Simple Trust Defined                        9-2
    Section 661: Complex Trusts                 9-4
    Character of Amounts Distributed            9-5
    Limitation on Deduction                     9-7
    DNI Computational Sequence                  9-8
    Adjusted Tax-Exempt Income                  9-10
    Capital Gains & Losses                      9-11
    The Capital Inclusion Steps                 9-12
    If DNI Zero:  Stop                          9-15
    Continuation Beyond DNI                     9-15

10. THE BENEFICIARY K-1s                        10-1

    The Start-off Instructions                  10-2
    Section 652: Simple Trusts                  10-4
    Section 662:  Complex Trusts                10-5
    K-1 Income Assignments                      10-7
    Characterizing K-1 Income                   10-9
    Material Participation:  The Key            10-10
    Deductions & Credits Limited                10-11
    A Simple Trust Example                      10-13
    Other Simple K-1 Uses                       10-15
    Complex Trusts & Charities                  10-17

11. TAX AND PAYMENTS                            11-1

    Taxable Income Revisited                    11-2
    Overview of Schedule G                      11-4
    Capital Gains Example                       11-6
    Alternative Minimum Tax                     11-7
    Foreign Tax Credit                          11-9
    Household Employment Tax                    11-11
    Accumulations for Charities                 11-12
    Payments with Extensions                    11-13
    Estimated Payment Vouchers                  11-15

12. TERMINATING THE TRUST                       12-1

    Identify “The Event”                        12-2
    What Probate Law Says                       12-4
    What the IRS Says                           12-6
    Notify the Beneficiaries                    12-7
    Accounting for Liquidation Proceeds         12-9
    The “Final Year Loss” Rule                  12-11
    Excerpts from Regulations                   12-12
    The Final K-1                               12-14
    The Final 1041                              12-17
    Keep a Contingency Reserve                  12-19