Level 4

Grantor Trust

Forum|Forum|2 months ago
April 4, 2026
1 reply
7 views

I have a client whose uncle died with an estate plan setting up a grantor trust for my client. The client has now received a 1099-composite in the name and EIN of the trust. The client has control over all the assets and can do what they want. So under the Grant Trust Rules, this is reported on the personal return. Howevever, since it's reported in the Trust EIN, what is the best way to the IRS to map the 1099 to the personal return? My thought is to add a disclosure for Schedule D as a "Preparer Note" in ProSeries. Any other recommendations?

ProSeries Tax

sjrcpa

Level 15

"uncle died with an estate plan setting up a grantor trust for my client"

Are you sure about this? Usually it would be the uncle sets up a Grantor Trust with your client as the remainder beneficiary. When uncle dies it is no longer a grantor trust - it becomes a simple or complex trust and must filer a 1041. Sounds like your client is also the Trustee.

The more I know the more I don’t know.

M

Mel7777Author

Level 4

Thank you for your question. I am new in the trust world and have taken several classes but this is my first run at applying textbook work to real world scenarios. I really appreciate your help. Allow me to elaborate...

Uncle dies with an trust in place. Uncle's trust document establishes a GST Exempt Trust for the benefit of the Uncle's nephew, Bob. Bob has the full control over the GST Exempt Trust and it is for his benefit only and his decedents. The document doesn't state a "grantor trust" but given he has full control of the assets (what is sold and what is purchased) so in review to of the Grantor Trust Rules, my thinking is that Bob's trust is a grantor trust. Bob also mentioned several times it is a grantor trust (but I know the client doesn't always know the right terms).

What do you think about the GST Exempt Trust for Bob - report earnings on Bob's 1040? If so, what is the best way to avoid a matching error with the IRS given Bob's trust has it's own EIN and included on Bob's personal 1040 under his SSN. Are the Preparer Notes sufficient?

Or would you recommend a different course of action for reporting? or other thoughts to consider?

sjrcpa

Level 15

Does Bob the beneficiary have control over distributions?

Or Bob the Trustee can distribute to Bob the beneficiary? And I've never seen a Trustee without the power to buy and sell, although a grantor could prohibit that.

I think your GST Trust needs to file a 1041. To the extent of the trust income, if Bob received distributions from the Trust his K-1 will have income.

The more I know the more I don’t know.

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