Trusts - file K-1 or Sched E

That's a lot of detail to put in a public forum! And this is a pretty complex situation. I would recommend (if it hasn't been done yet) that there be a meeting of heirs with the CPAs for the two estates and the trusts to let you know about how this all will shake out for tax purposes. There will be Schedules K-1 in one of two circumstances: (a) There were distributions made from either the estates or the trusts to the beneficiaries; or (b) The estates or the trusts terminated. The estates can have any fiscal year that ends within the first 12 months of death. If the trusts were originally set up as living trusts, the estate can make an election to have the trust take the same year-end as the corresponding estate. That means, for example, that an estate with a July fiscal year, and that distributed assets to heirs, in, let's say, December 2009, would issue a 2009 Schedule K-1 sometime after July 31, 2010, and you would report its results on your

Good planning suggests that if the estates or trusts have significant income (other than capital gains and qualified dividend income), there should be discussions about distributing income to the heirs, because the tax schedule for estates and trusts is very steep, reaching 35% at $11,200, in 2010, and many heirs won't have that high a tax rate.

The Land Trust sounds like it may be a Grantor-type Trust. You don't get a Schedule K-1; instead you get information that allows you to report your share of results directly on your returns (for example on Schedule E page 1).

I thought so too, at first glance, but it's really not, when you look at it more closely. No dollar amounts, "Uncle Smith" could be anybody. Maybe other proper nouns were made up?

It is a good amount of detail for getting good answers, but not necessarily disclosing private or confidential information.

And this is a pretty

Amen. It's hard to judge without access to the actual trust documents and wills. Need a lawyer involved, given the implied level of investments.

There will be Schedules K-1 in one of two circumstances:

Right, but there are additional circumstances which still require filing a trust or estate income tax return. Even if the K-1's report no items of income or deduction, still a good idea to provide them for documentation's sake.

I'd like to know more about Land Trusts, or at least where to find more info.

-Mark Bole