Trusts & Estates

Hawaii’s premier provider of tax planning and tax return preparation (1041) for trusts and estates

Every estate and trust scenario has unique dynamics. We listen carefully to and work closely with our clients to ensure we understand the nuances of each situation, and to provide an optimal tax result.

We help navigate the sometimes challenging occasions when a family member passes and assets flow to a trust, where trust taxation comes into play. We act as a reliable and trusted outside party to furnish independent advice and services, providing comfort, and setting your concerns at ease.

Fiduciary Tax Returns for Trusts and Estates

When estates and trusts become taxable entities, they must report items of income and expense on a distinct tax return, Form 1041. The trust return considers income and expense along with trust accounting rules to determine income, if any, that ends up being passed (via a K-1) to trust beneficiaries.

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Estate and Trust Taxation

Most trusts and decedent estates generally must file Form 1041, U.S. Income Tax Return for Estates and Trusts. We work closely with clients to support the initial and ongoing annual filing of trust tax returns.

The most common trust is a revocable living trust. These are established by a grantor (person who funds the trust) who reserves the right to revoke or amend the trust at any time until his death. During the grantor’s lifetime, the revocable trust is seen by the IRS as a disregarded entity, and any items of income or loss are simply recorded on the grantor’s individual tax return, Form 1040.

At the grantor’s death, the trust becomes irrevocable. At such point, the trust becomes a taxable identity (it is no longer disregarded), must obtain an EIN, and must file tax returns on Form 1041.

In most cases, the irrevocable trust will remain open and file tax returns only for a short while, until the corpus is distributed to designated beneficiaries. In some cases, the corpus is allocated among new trusts created on the grantor’s death. These trusts file tax returns (Form 1041) on an ongoing basis to report income.

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