As discussed in our recent eblast dated January 4, 2024 (click here), new trust reporting rules have been enacted for taxation years ending on or after December 31, 2023. We want to ensure that our clients carefully consider these new requirements to ensure that any required trust filings are brought to our attention.
Examples of these new filing requirements include the following bare trust arrangements:
- Ownership of a property or a part thereof where a child has legal title only for his/her parents or other person(s),
- Ownership of a property or a part thereof where a parent has legal title only for his/her child or other person(s),
- A bank/investment account where a child has legal title only for his/her parents or other person(s),
- A bank/investment account where a parent has legal title only for his/her child or other person(s),
- A bank/investment account set up in trust for a child, grandchild, or other person(s),
- A mortgage co-signed by a parent on behalf of a child or other person(s),
- Specific client trust accounts held by lawyers, paralegals, law firms, property managers and other bare trust arrangements,
- A bare trust arrangement where a person can act as an agent for beneficiaries under the trust with respect to all dealings of the trust’s property,
- A general partner having legal title only to real property in trust for a limited partnership,
- A corporation having legal title only for real property in trust for probate purposes, rental income, development or construction on behalf of a joint venture.
There is no obligation to file a trust return where a trust arrangement was in existence for less than three months as of December 31, 2023 or held assets with a fair market value of less than $50,000 and these assets consisted only of money, arm’s length loans or publicly traded securities.
The filing deadline for these trust returns is April 2, 2024.
Trusts that fail to comply with these new rules may be subject to significant penalties.
Please contact your Lipton advisor in order to determine how these changes may impact you.
