FAQs: Trust or Trustee Fee

1. Do I need to report the assets of a revocable trust that I established for myself and my family?

Yes. Although a revocable trust that someone outside your immediate family established for your benefit is not normally reportable, you must report the assets of a revocable trust that you established for yourself or your family.

2. I have a remainder interest in my father’s revocable living trust. Is that reportable?

As with most revocable trusts, as opposed to irrevocable trusts, you generally do not report an interest in a revocable living trust (unless you, your spouse, or your dependent child is the grantor of the trust). For a detailed discussion of revocable living trusts, see an OGE memorandum entitled “Revocable Living Trusts,” DO-02-015, dated June 11, 2002 (accessible on OGE’s website by clicking this link). However, you should consult your agency’s ethics official if you are a beneficiary of a revocable living trust because trusts are often highly individualized and state laws governing trusts vary.

3. I received a discretionary distribution from my mother’s revocable living trust. Is that reportable?

As with most revocable trusts, as opposed to irrevocable trusts, you generally do not report discretionary distributions received from a revocable living trust in Schedule A (unless you, your spouse, or your dependent child is the grantor of the trust). However, you should consult your agency’s ethics official if you are a beneficiary of a revocable living trust because trusts are often highly individualized and state laws governing trusts vary.

4. Can you give me an example of an instance in which a revocable trust established by someone for my benefit would be reportable?

Yes. One example arises in the context of mandatory distributions.

In many cases, the trust instrument for a revocable living trust either will be silent as to distributions to beneficiaries or will make clear that such distributions are discretionary.

Normally, you do not need to report your interest in a revocable living trust if you are the beneficiary, rather than the grantor. However, as an exception to this rule, you do need to report your beneficial interest in a revocable living trust if the trust instrument expressly directs the trustee to make present, mandatory distributions of trust income or principal to you (or your spouse or dependent child). In such situations, even though the grantor retains the power to revoke the trust or change beneficiaries, the fact remains that the trust instrument gives you a right to present enjoyment of trust assets– not merely a future interest– and this present enjoyment cannot be interrupted except by an affirmative act of the grantor to alter the trust.

For a detailed discussion of revocable living trusts, see an OGE memorandum entitled “Revocable Living Trusts,” DO-02-015, dated June 11, 2002 (accessible on OGE’s website by clicking this link).

5. Is there any additional guidance available on how to report a “discretionary trust” or “sprinkling trust”?

Yes, additional information is available in an OGE memorandum entitled “Discretionary Trusts,” DO-08-024, dated August 6, 2008 (accessible on OGE’s web site by clicking this link). However, you should consult your agency’s ethics official if you are a beneficiary of a “discretionary trust” or “sprinkling trust” because trusts are often highly individualized and state laws governing trusts vary.

6. What if I am a beneficiary of a “discretionary trust” or “sprinkling trust” but I did not receive any distributions from the trust during the reporting period?

Generally, you do not need to report anything, provided that (1) the trust is a discretionary trust and (2) neither you nor your spouse or dependent child received distributions totaling more than $200 during the reporting period. Additional information is available in an OGE memorandum entitled “Discretionary Trusts,” DO-08-024, dated August 6, 2008 (accessible on OGE’s web site by clicking this link). However, you should consult your agency’s ethics official if you are a beneficiary of a “discretionary trust” or “sprinkling trust” because trusts are often highly individualized and state laws governing trusts vary.

7. I see a column for “qualified trust” on my 278 report. Do I need to mark that column?

Probably not. This column is for OGE approved blind trusts (“qualified blind trusts” and “qualified diversified trusts”), which only a handful of individuals at any one time will have. For more information, click here.

 

This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.

Note: To return to the previous page, close this browser window.