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Client is Executor & Trustee for Aunt

Level 2

He moved his Aunt to AZ & purchased a home with her money and he is on the mortgage, he was made executor & trustee. Home is in trust. She has passed.  All the beneficiaries want to make sure he doesn't incur any personal liability once the house sells. He will get a 1099S & have to report the gain on his taxes?  OR will he file a form 1041 and the estate takes the gain?

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3 Comments 3
Level 15

The home is in the trust, but he is personally on the mortgage? He is executor of the Will, Trustee of the Trust, and the trust has beneficiaries, but that doesn't include him?

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Level 15

Slow down and sort the facts.

Maybe the house and mortgage are titled:

Nephew, Trustee,  Aunt's Trust

Is it a Grantor Trust or an Irrevocable Trust?


Level 15

I don't know of many banks that make mortgage loans to trustees.  The house is usually deeded to the trust only after the purchase and financing are closed.  So the original deed and mortgage probably says the owners are "Aunt Jones and Nephew Jones."  Then they deeded it to "The Aunt Jones Trust," with Aunt Jones as Trustee and Nephew Jones as Successor Trustee.  The trust by now should have its own EIN.  The sale will be reported on the Form 1041 he should file. When you say the other beneficiaries don't want him to have any personal liability, do you mean tax liability?  Has the house increased in value since she died?  (Many Arizona homes have gone up 20% or 30% in the last year.)  He's responsible as Trustee for paying any taxes owed by the Trust.  Also owed by her, before she died, if he makes distributions to beneficiaries before paying IRS.