As I understand it, the income of a grantor trust is reported by the grantor. When the grantor dies, the succesor beneficiary reports the income of the trust. Does the switch-over occurs on the date of death? Or the day before?
TIA
Actually in the normal situation the trust becomes irrevocable on the date of death. So the trust reports the income until the property producing the income is distributed to the beneficiary.
The trust can recognize the income and pay tax on it, though it?s not normally recommended. Bracket creep for trusts is much steeper than for individuals, so the trust would likely end up paying more tax than the individuals.
The taxable income can be made recognizable by the beneficiary instead of the trust by making a distribution to the beneficiary during the tax year.
The grantor is considered the owner of the property through the date of death. The trust is considered the owner beginning the day after.
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