[WSBAPT] Separate Trust Shares

[Mark Higgins]

Patrick--please consider asking the cpa who will prepare the trust's annual
tax return.  My understanding is that accounting for separate shares,
including the trust's taxable income and any tax owed by the trust, can
become quite gnarly if the beneficiaries do no have absolutely equal
distributions of income or principal, and accountants very much prefer
separate trusts to separate shares.  Will the extra cpa fees in a separate
shares trust be more or less than the extra trustee fees in two trusts?​

Mark

On Mon, Jun 29, 2015 at 12:47 PM, Patrick J. Galloway <
patrick at alsnorthwest.com> wrote:

> The Will establishes a testamentary trust which states that sisters shall
> be beneficiaries of the trust in two equal shares. The trust is to
> establish separate trust shares. The language is clearly 1 trust to be
> managed by one trustee, Edward Jones, but accounted for as two separate
> trust shares.
>
> Ed Jones states that they want to treat this as two trust and want me to
> obtain two EIN's for them. The problem (besides the fact that this violates
> the unambiguous language of the trust) is that the funds, about $800k, if
> managed as two trusts will incur an additional admin fee and will likely be
> subject to a minimum annual fee over the 1.5% asset based fee due to the
> limited amount of funds in each trust.
>
> The funds are not qualified.
>
> My research indicates that we should follow the language of the trust as
> written and that having a separate accounting for trust shares is allowed
> by the IRS. See 26 CFR 1.663(c). Before I push back on the Ed Jones Trust
> department (the sisters can fire Ed Jones under the terms of the Trust and
> select another trustee) I wanted to seek comments from my colleagues to see
> if I am missing something? Maybe a tax advantage or an IRS ruling - some
> reason that Ed Jones wants to manage the trust in this manner other than
> ease of administration on its end and additional fees.
>
> Thanks,
>
> *Patrick J. Galloway*
>
> Advance Legal Services, PLLC
>
> 8113 W. Quinault Ave. Suite 101
>
> Kennewick, WA 99336
>
>
>
> (509) 851-7884
>
>
>
>  www.alsnorthwest.com
>
>
>
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-- 
Mark T. Higgins
Mark T. Higgins, P.C.
P.O. Box 57
Darrington, WA 98241
206-491-2420
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