My siblings (5) have money in a trust. My older brother is the primary acct holder, how do we pay the taxes?

Question

The trust is set up to be distributed among us 5, once my Mother passes. I don't think all of our names are on the account as joint, just two of us?

Answer 1

The trust should be the primary account holder. Your brother is just the Trustee and should be listed on the account as such. Anyone else on the account is just a co-trustee.

He needs to file a Form 1041, Us Income Tax Return for Estates and Trusts, listing all of the income and expenses for the trust. The Form 1041 is an informational return, no tax is paid with it.

As part of the Form 1041 filing he then must generate a Schedule K-1 for each beneficiary and send them a copy. The Schedule K-1 lists each beneficiary's share of the income and expenses.

You will use this Schedule K-1 to account for the income from the trust and your share of any deductions attributable to the trust's activities.

If he hasn't set up the account properly, he should probably consult with a CPA to get things sorted out. The trust's EIN or TIN should be on the account, not his. Completing the Form 1041 return can be tricky and he may need professional assistance on that as well. This is NOT a job for a store-front tax prep mill. He should be working with a CPA or tax attorney.