- 63 -
FINANCIAL FLOW OF COMMON- LAW TRUST SYSTEMS
IRREVOCABLE, DISCRETIONARY, COMPLEX TRUSTS
TRUST INCOME & EXPENSE FLOW
DAVID EDWARDS, M.D.
CLAW,
SCOTT,
SIERRA,
MALPASO CLAW LAP TAKE FIVE SOL
Trust Upstreaming Upstreaming Personal Investment Other Real Focus
Function Trust- Trust- Residence Trust Estate Trust
Equipment. Service & Trust Trust
(Automobile) Supplies
Income Rent or Payments Rent from Sale Rest or K-1 Dividends
Lease for services other Trusts, Proceeds Lease from other
Contracts w/ or supplies Corporations, Interest Sale Trusts,
business Accounts Tenants, Dividends proceeds
Receivables or Businesses
Expenses Lease or Purchase of Normal Purchase of Advertising Normal
Contract supplies, Mortgage Investments Mortgage Charitable
payments. Account Taxes Dividend to Taxes Contributions
Expenses to Receivables, Maintenance Focus Trust Maintenance K-1 Dividends
maintain Inventory at Insurance Improvements to Beneficiary
equipment standard, Supplies Insurance Educational
Gas resell at Depreciation Supplies expenses,
Supplies Profit Repairs Depreciation Medical
Repairs Dividend to Utilities Repairs Insurance
Rent to Focus Trust Add ons Utilities Medical
other trusts Improvements Add ons payments,
Dividend to Furniture Improvements
Focus Trust Dividend to Furniture Abnormal
Focus Trust Fixtures Life Insurance
Dividend to premiums
Abnormal Focus Trust
T.V.
Newspaper
Phone
Assets held Equipment Contracts Residence Stocks, Property UBIs in other
etc. Trusts
Depreciation Equipment None Residence None Property none
Furniture
Prior to the end of the calendar (tax) year, a Trust can reduce its taxable
income by paying Trustee Fees (1099) or wages to employees (W-2). A Trust can
also make unlimited charitable contributions with a write-off of up to 100%
of the Trust income. If there is still taxable income remaining in your trust
after calendar year end, a Trust has until March 5th (65 days) to make
distributions to the Beneficiaries and further reduce or eliminate Trust
income. Distributions are made on a Fiduciary K-1 form to one or more of the
Beneficiaries. If the taxable income stays in the Trust, then it will be
taxed at the Trust's tax rate which increases very rapidly. However, unlike
people, a Trust is only taxed on income it actually keeps (doesn't
distribute), not on net income earned.
Page: Previous 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 Last modified: May 25, 2011