Simple trust

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simple trust

n. a trust which requires that all income be distributed each year and not accumulated. (See: trust)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.

SIMPLE TRUST. A simple trust corresponds with the ancient use, and is where property is simply vested in one person for the use of another, and the nature of the trust, not being qualified by the settler, is left to the construction of law. It differs from a special trust. (q.v.) 2 Bouv. Inst. n. 1896.

A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
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For these purposes, two general categories of trusts apply: simple trusts and complex trusts.
The rest of this article will focus on simple trusts, since those are more common.
With simple trusts, the distributions are made as often as the trust documents require them to be.
Since 2003, the IRS has allowed certain foreign partnerships, foreign simple trusts, and foreign grantor trusts to become WPs/WTs and take over chapter 3 and chapter 61 reporting/ withholding with respect to certain partners/beneficiaries.
Simple trusts are those that are required to distribute all income in the tax year in which it is earned; that neither distribute nor reserve any money for charitable purposes; and that do not distribute amounts from the corpus of the trust.
Non-grantor trusts can be classified as simple trusts or complex trusts.
(5) Also, in most cases the investment income tax does not apply to simple trusts or grantor trusts.
Simple trusts are required to distribute all income, but are not permitted to distribute from corpus or make charitable contributions.
Simple trusts are required to distribute all current income and are, by definition, prohibited from making charitable contributions.
Simple trusts, defined by the Internal Revenue Code as a trust that must distribute all income annually, comprised 7.3 percent of total assets given.
Complex and simple trusts were also relatively common filers.

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