Trust Income and Principal Analysis

If a trustee does not properly keep track of trust income and principal, it is very possible that some beneficiary will get less than they should.

The Typical Problem

The husband sets up a trust for his wife. The trust reads that the income goes to the wife for life, and, if needed she can also take principal for health and welfare needs. When the wife dies, the assets in the trust go to the husband's children (who are step children of the wife).

After the husband dies, the wife used trust principal to build new homes for her kids (who are not the kids of the father). If the wife decides to give lots of money using trust principal to the museum, you get the same result.

It is clear that the husband's natural children have been taken to the cleaners.

If this situation sounds familiar, call me!

I am a CPA that has been working with trusts since 1978. Using high tech methods, it is easier than before to find when the trustee distributed principal that should have stayed in the trust. It may be possible to return principal to the trust.

David M. Kaufmann, C.P.A.
7200 S. Alton Way, Suite B-195
Centennial, Colorado 80112

1-800-326-6686 (Denver Tax Software, Inc.)

 

 

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