When and how to wrap up a trust for maximum asset protection

You need to know when it’s time for a trust to be wrapped up and finalized. Properly ending a trust can help clients maximize their assets, minimize tax liabilities and ensure compliance with relevant tax regulations, ultimately safeguarding their financial interests.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you’ll have access to the full recording and the entire list of Q&As.   

Q: Why would a trust have withholding?

A: In our example, the trust received a pension distribution and the company is required to withhold from any distributions.

Q: With a revocable living trust, can you pick any 12-month period rather than a short year after the date of death?

A: No. A trust needs to file a calendar-year return. Only an estate can file a fiscal-year return.

Q: If there was a refund on the final Form 1040 return, would that refund become income to the trust?

A: No. A refund from the Final Form 1040 is not considered income on the Form 1041.

Q: Do you report the sale of the house on Form 8949, Sales and Other Dispositions of Capital Assets, or on Form 4797, Sales of Business Property?

A: The sale of the home is reported on Form 8949. Form 4797 is only used for business assets.