Tucson Tax Team LLC + 6111 East Grant Road + Tucson, AZ 85712 + (520) 777-7844
General Fiduciary Responsibilities
Fiscal Responsibility As a trustee, you stand in a “fiduciary” role with respect to the beneficiaries of
the trust, both the current beneficiaries and any “remaindermen” named to receive trust assets upon
the death of those entitled to income or principal now. As a fiduciary, you will be held to a very high
standard, meaning that you must pay even more attention to the trust investments and disbursements
than you would for your own accounts. You will need a Certificate of Trust or a letter of appointment
showing you are the Trustee or Executor of the Trust/Estate.
The Trust Terms Read the Trust itself carefully, both now and when any questions arise. The Trust is
your road map and you must follow its directions, whether about when or how to distribute income
and principal or what reports you need to make to beneficiaries.
Accounting One of your jobs as Trustee is to keep track of all income to, distributions from, and
expenditures by the Trust. Generally, you must give an account of this information to the beneficiaries
on an annual basis, though you need to check the terms of the Trust to be sure. In any case you must
use reasonable care in your bookkeeping so proper and correct tax returns can be filed annually.
Fees Trustees are entitled to reasonable fees for their services. Often the Trust terms will spell out the
amount of Trustee fees. Otherwise the fees must be reasonable based on the amount of work needed to
properly maintain the Trust. The Trust must file form 1099M for any Trustee that earns over $600.00
during the calendar year. The Trustee must report this income on their personal tax return in the year
Disbursements Depending on the Trust documents none, some, or all of the Trust income must be
distributed on an annual basis to the beneficiaries. It is your responsibility to know what income must
be distributed and to make sure it is timely completed. Income not distributed is taxed at the Trust’s
tax level and is usually a higher tax rate than if the money is distributed and reported on the
beneficiaries’ personal tax return. A form W-9 should be obtained from each beneficiary before the first
distribution is made.
Taxes A tax return must be filed by an Estate or Trust if gross income is over $600.00 during the year.
If money is distributed to beneficiaries, they will receive a Sch K-1 that shows income/expenses during
the year for their personal tax return.
An Estate tax return is due if an individual’s estate is greater than $11,200,200 for 2018.
Capital Losses Capital losses may not be used by the Estate/Trust until the final year. The unused
capital losses can be “distributed” to beneficiaries in the final year to be used on their personal tax
Form 56 You should file form 56 to notify the IRS of your fiduciary relationship. Tucson Tax Team can
prepare this form for you.