What is a liquidating trust
If one-third of the trust assets go to Beneficiary A, for example, she may simply transfer title to a trust-owned house if its value is appropriate, or sell the house and distribute the proceeds to the beneficiaries.
If after trust debts are paid, insufficient assets remain to satisfy all beneficiaries, the trustee will have to prorate the distributions to beneficiaries.
She must list all titled property in a living trust that is still held in your name and turn it over to the probate court through the estate executor, because it is likely to be subject to probate.
If you created the trust and it was revocable until your death, the trustee needs the value of all your assets, including the value of trust property, to find out if its total value exceeds the estate tax exemption, which is ,250,000 as of 2013.
Only then can the trustee distribute the trust property.
The applicable legal standard distinguishing an ordinary trust from a business trust has remained relatively static (albeit vague) since the ancient origins of our federal tax system. Finally, all business trusts whose certificates of beneficial interests are publicly traded will be taxed as corporations under IRC § 7704 and are beyond the scope of this article.Dealing with 'check-the-box' regulations By Carter G.Bishop Is that trust an ordinary trust or a business trust? Business lawyers commonly assume that trusts formed for their clients will be taxed as "ordinary trusts" under federal income tax rules.The person in charge of distributing assets held in a living trust to the trust beneficiaries is called the trustee.The process of distributing the trust property is a bit more involved than simply handing property over to the beneficiaries.
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The most important document is the trust document that created the trust – either a living trust document or the decedent’s will.