Understanding trust taxation can help ensure proper compliance and avoid unnecessary penalties. While a grantor is alive, a revocable living trust does not require a separate tax return; the IRS taxes the trust's income as part of the grantor’s personal return. However, once the grantor passes, the trust retains its assets, and tax implications shift. At that point, the estate executor must file the grantor’s final tax return and may need to obtain an Employer Identification Number (EIN) for the trust.
For those managing trusts, special circumstances—such as mental incapacity of the grantor—can further complicate tax obligations. Consulting with a knowledgeable trust attorney can simplify the process and ensure compliance with Michigan tax laws.
Learn more about filing a Michigan Fiduciary Income Tax Return here.
Don’t Let Trust Taxation Overwhelm You
If you have questions about an existing trust, consult a trust attorney in Ann Arbor who can provide tailored legal advice. We’re here to help you navigate trust taxation and estate planning. For personalized guidance, call us at (734) 665-4441 or submit a contact form.
