What is the 65-day rule for trusts?

The 65-day rule relates to distributions from complex trusts to beneficiaries made after the end of a calendar year. For the first 65 days of the following year, a distribution is considered to have been made in the previous year.

How long do you have to distribute income from a trust?

65 days
Under Section 663(b) of the Internal Revenue Code, any distribution by an estate or trust within the first 65 days of the tax year can be treated as having been made on the last day of the preceding tax year.

What is the 65-day rule for estates?

What is the 65-Day Rule. The 65-Day Rule allows fiduciaries to make distributions within 65 days of the new tax year. This year, that date is March 6, 2021. Up until this date, fiduciaries can elect to treat the distribution as though it was made on the last day of 2020.

What is the 645 election?

Well, a §645 election allows the executor of an estate and the trustee of a revocable trust to elect to treat the estate and the trust as one for tax purposes. Generally, estates have the ability to elect a fiscal year end or a calendar year end, whereas trusts default to a calendar year end.

How long does an executor have to distribute assets in Texas?

The general rule in Texas is that the executor has four years from the date of death of the testator (person who drafted the will) to file for probate.

How long does a trustee have to notify beneficiaries?

Several states require you to send a notice to all trust beneficiaries within a certain time after you take over as successor trustee of the trust. Most states give you 30 or 60 days to send this initial notice.

Does 65 day rule apply to simple trusts?

The 65-Day Rule applies only to complex trusts, because by definition, a simple trust’s income is already taxed to the beneficiary at the beneficiary’s presumably lower tax rate.

When can a 645 election be made?

The IRC § 645 election is irrevocable once made. The election must be made on IRS Form 8855 (Election to Treat a Qualified Revocable Trust as Part of an Estate) by the due date, including extensions, of the estate’s initial income tax return.

Why would I make a 645 election?

Can the 65-day rule be extended?

65-Day Rule: The Law It is important to note that the trustee or executor must actively make an election on a timely filed tax return to enjoy the benefits: they are not automatically extended to a trust or estate.