Simple versus Complex Trusts

David Stone serves as Director/Investments for the CR Wealth Management Group of Stifel and provides advice to a number of ultra-high net worth families whose wealth management plans include complex trusts.

A complex trust is, by definition, any trust that cannot be classified as simple. A simple trust must distribute its income in the year that the trust receives it; however, it may not distribute any funds that are not classifiable as income. These disallowed funds include any and all corpus, defined as the money that originally established the trust.

A complex trust may retain a percentage of its income per year and can distribute to beneficiaries some amount of the corpus. In addition, the complex trust may specify separate amounts that the trust can then pay out to a particular charitable recipient.

David must understand the distribution requirements for both simple and complex trusts, as the manner of income handling can cause a trust to change classifications within a tax year. Having knowledge of complex trusts also allows David and his colleagues to properly consider both taxation due and the expenses of the vehicle, the latter of which come due when the trust expires.

Stifel does not provide tax advice. You should consult with your tax advisor regarding your particular situation.

Stifel, Nicolaus & Company, Incorporated | Member SIPC & NYSE

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New York, NY 10036

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