My mother was a resident of Florida and passed on March 23, 2013. She owned a condo in Florida and a home in Rhode Island. The home in RI has since sold for approximately $179 K and the condo in Florida has recently been put on the market for sale for about $39 K. My brother is Trustee of her Trust and I am executrix. The only items in the Trust are the two pieces of property. All the rest of her estate is distributed to beneficiaries. These are my questions:
1. If the condo in Florida is not sold this year, but rented instead, would the rent then go into the Trust as income. And, if so, would the Trust be subject to Federal Income Tax ?
2. Is my mother's Trust subject to Federal Income Tax in any way ?
1 Answer from Attorneys
The trust will need to file a Form 1041. If any money from the trust is distributed out to the beneficiaries, it will also need to complete K-1s for the beneficiaries, and they would pick up the income. As far as the rent goes, if all the income is distributed out, then all the beneficiaries will pick up the income on their own personal returns via the K-1. If you rent the Florida property out, I would advise keeping some money in the trust to deal with repairs, taxes, etc.
Kevin A. Pollock, J.D., LL.M.
P: (609) 818-1555
Licensed to practice law in Florida, New Jersey, New York and Pennsylvania.
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