Thank you for checking! The CO house was on a piece of 20 acre farmland with Water Rights, which were viewed as personal property, all in the trust as of the date of the husband's death, and both the real property and water rights were sold in 2021 as separate transactions with significant capital gain. A portion of the money from the sale were used to buy the new house in Florida, and the new house was under the title of the successor FL living trust, to which the wife is the only grantor.
The FL living trust is now only holding title of the new house, no other assets under the FL trust. The remainder assets are still held by the CO trust with no trust documents amended. No distribution to listed beneficiaries, listed as the wife's three children. The daughter is listed as the substitute trustee in the case that the mother dies or losing capacity, so the CO trust seems to be still in existence with an executor till this day, simply making disbursement to Wife's FL living expenses as defined in the trust documents as "Expenses and Taxes". "Transmission to other trust and estate" is also covered under the "Expenses and Taxes" definition.
Now I see literally the wife is the grantor of both the CO trust and the FL trust. Sorry for messing up the facts - I was literally making the call to client verifying these while typing this update of fact pattern.
So I think the purchase of the FL house and periodic distribution to the wife's checking account needs to be treated as distributions from the CO's Form 1041? Further reading the allowable deductions from the tax perspective I guess the trust document's definition of "Expenses and Taxes" has nothing to do with the allowable tax deductions....
In addition to worrying about the late EIN for the CO trust, I am also considering about the Form 706 filing requirement at the husband's deaths back in 2019. I'm assuming we should use the $11.4 million exemption as the late husband? Either way, the entire trust asset fair market value is far less than the threshold (all appraisal work done), I am assuming no Form 706 is needed.
