Grantor's Trust - how to file 1041 upon death of grantor?

Forum|Forum|5 years ago
March 4, 2021
2 replies
0 views

For 8 years, I have filed a 1041 for my parents' EIN as a grantor's trust with a pointer to their 1040 where taxes were paid on trust income under their SSNs. My father passed and then my mother in 9/2020. First, do I need yet another EIN (again, already have one) even though I am already trustee and have been for 8 years? I hope not as it will be a pain to transfer all of their brokerage/bank accounts. Secondly, how do I handle my mom's 2020 taxes? I am thinking I do the usual 1040 for my mom and the 1041 as a grantor's trust again but only covering through her passing (September 2020). Then what, do I need another 1041 for the trust alone which now becomes an simple trust for September 2020 through 12/31/2020? Or, do I do another 1041 and also Form 8855 so that the trust can avoid paying taxes until the fiscal year has passed and also avoid estimated tax. This will give me more time to distribute assets to the two beneficiaries. Thank you for any insight and advice.

TurboTax Business Windows

M-MTax

The trust needs a new EIN....https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein. File a 1041 and this time it will become a new entity as of the date of your mother's death. Anything before that date you can put on your mother's return.

K

kmd11Author

Employee

Thank you. But how am I going to know exactly what part of dividends and interest were paid to her prior to death if it all comes on a 1099 at the end of the year? So, what happens to the old EIN? Do I reference it when I apply for a new one? This doc seems to indicate it's not essential to get the new EIN - https://d3n8a8pro7vhmx.cloudfront.net/kflaw/pages/1026/attachments/original/[phone number removed]/11b.pdf Specifically, it says, "A situation might arise where a grantor trust did have a separate EIN while the grantor was alive: Should that number be used after the grantor's death so that new accounts do not need to be opened? Or should a new EIN be obtained to simplify the process of preparing income tax returns for the year of death? The solution may depend upon the number of accounts involved, and how much income was earned prior to death. At a minimum, consider obtaining a new EIN and opening new accounts to avoid the problem of manually allocating income between pre-death and post-death periods."

M-MTax

You STILL need a new EIN....look at the IRS link.....and if everything gets reported on one 1099 you have to report ALL of it on the return with the EIN on the 1099 and then subtract the portion received as a nominee. The only way to do this is to look at the broker or bank statements because those will have the dates interest, dividends, gains, and whatever were paid. This process is ALWAYS a hassle and the only thing you can do is be glad you only have to do it once.