SOCIAL SECURITY 2023 UPDATE SSI FOR NYS RESIDENTS Individual $1,001/month Couple $1,475/month MAXIMUM TAXABLE…
In the simplest terms, a Grantor Trust is a trust that authorizes a grantor (the person who set up the trust) to retain certain powers with respect to the property transferred to the trust and the trust administration. These powers can include the power to revoke, amend, or terminate the trust, and the power to control some or all of the property in the trust in some way.
The grantor will report items of income, deduction, and credit associated with the trust property on his or her own individual income tax return because the trust is not an independent taxpayer.
A grantor trust can either have its own Tax Identification Number or use the Social Security Number of the grantor.
When the trust uses the social security number of the grantor, then the grantor will usually report the income, deductions and credits associated with the trust property on his or her individual income tax return.
If the trust has its own Tax Identification Number, then the trustee should file a fiduciary income tax return on the IRS Form 1041.
There is an attachment to the form where the trustee would report information about the grantor as well as the income, deductions and credits associated with the trust property. The trustee will give this information to the grantor to report on his or her own individual income tax return.
While grantor trusts are important parts of many strategies used in estate planning, they are complicated. It’s vital for everyone to understand the distinctions between grantor and non-grantor trusts in order to make informed decisions while establishing their estate plan.