But if the right to receive residuals was bequeathed to the beneficiaries, shouldn't it be the beneficiaries' income rather than as a passthrough from the LLC?  Whether the beneficiaries assign or contribute that income to the LLC shouldn't change that fact, by fruit of the tree doctrine.  If the arrangement was structured by an attorney or financial planner, it'd be best to consult that person as to the technicality, operations, and the appropriate tax reporting position.