QUESTION
If this is allowable, how would such delayed compensation be handled in the books?
Asked on May 11th, 2013 on Estate Planning - Michigan
More details to this question:
May the trustee of an irrevocable trust legally bill the trust for his hourly compensation in the years following the year that the work was actually performed in order to obtain the tax advantage for the trust that a particular year may afford? The trust document does not comment on this issue.
9 ANSWERS
2 Awards
The question is complex, see a local estate tax attorney.
Answered on May 16th, 2013 at 4:57 AM
It depends what you mean by "bill". If the trust is a cash basis taxpayer, it deducts the fees in the year in which it pays them. So, it would not matter when the services are performed. If it is an accrual basis taxpayer, there could be a problem.
Answered on May 15th, 2013 at 7:03 AM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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You are advised to contact a CPA who specializes in trust/tax consequences.
Answered on May 15th, 2013 at 5:27 AM
Thomas Edward Gates
Talk to a cpa or tax attorney for guidance.
Answered on May 15th, 2013 at 5:25 AM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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Are you asking if the trustee can be compensated at a time that will most benefit the trust? Why not?
Answered on May 15th, 2013 at 5:07 AM
This question should be addressed to the accountant for the trust and an attorney specializing in trusts.
Answered on May 15th, 2013 at 5:06 AM
Commercial Contracts Attorney serving Boise, ID
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Peters Law, PLLC
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If it saves the trust taxes without actually taking more money than is required to pay the bill, why would you have a problem with it. You may want an opinion from the trust's accountant that the action is legal.
Answered on May 15th, 2013 at 5:05 AM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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Possibly. Timing of compensation can be affected by a lot of things. Sometimes, compensation is not taken until the end of the administration. There is nothing inherently wrong with this.
Answered on May 15th, 2013 at 4:51 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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I would have to look at the Trust documents and the trustee's compensation agreement, as well ad determining if the trust is on a cash or accrual accounting basis.
Answered on May 15th, 2013 at 4:15 AM