2025 Top 10 Tax Tips & FAQ
Tax season is approaching!
Midwest Special Needs Trust (MSNT) staff are not tax professionals and cannot provide tax advice. However, we are available to answer your trust sub-account questions. As you prepare for the upcoming tax season, please keep the following information in mind:Who Handles Trust Tax Preparation?
MSNT contracts with True Link Financial, Inc., which coordinates trust tax preparation services with a third-party accounting firm. This ensures that trust-related tax filings are handled accurately and professionally.How the Trusts Work
MSNT administers multiple types of trusts, and each functions separately for investment and management purposes:- First Party Trust
- Third Party Irrevocable Trust
- Third Party Revocable Trust
How Funds Are Managed
Funds deposited on behalf of the Beneficiary are:- Pooled with other funds of the same trust type and portfolio type
- Invested collectively for efficiency and tax optimization
- Tracked individually — all earnings and activity are accounted for separately
Helpful Tax Tips For All Trust Sub-Accounts
- Beneficiaries are responsible for filing their own personal tax returns.
- Personal tax preparation fees and payment of personal taxes are allowable expenses that may be submitted as a request for funds.
- Don’t file too soon! You will be receiving your important tax documentation in March (Grantor Letters or Schedule K-1s).
- Notify us of any change in address as soon as possible so the documentation we mail out gets to you as timely as possible.
- Sub-accounts within the First Party and Third Party Irrevocable Trust Pools are irrevocable. As of October 2020, these sub-accounts are not a separate entity for tax purposes and do not have a separate tax identification number. This reduces the tax preparation fees for each sub-account.
- For trust sub-accounts opened in calendar year 2025, Beneficiaries may receive tax documents from the source of funds. This should be forwarded to MSNT as soon as possible.
- The First Party Trust Pool is a Grantor Trust. The Co-Trustee, responsible party or Beneficiary will receive a Grantor Letter in March. The Grantor Letter will reflect the income and deductions for calendar year 2025. The Beneficiary will need to provide the Grantor Letter to their tax preparer to determine if there will be personal income tax consequences.
- The Third Party Irrevocable Trust Pool is a Non-Grantor Trust. The Co-Trustee, responsible party or Beneficiary may receive a Schedule K-1 in March. The Schedule K-1 will reflect the income and deductions for calendar year 2025. If you receive a Schedule K-1, the Beneficiary will need to provide the Schedule K-1 to their tax preparer to determine if there will be personal income tax consequences.
- The Third Party Revocable Pool is a Grantor Trust. The Donor will receive a Grantor Letter in March. The Grantor Letter will reflect the income and deductions for calendar year 2025. The Donor will need to provide the Grantor Letter to their tax preparer to determine if there will be personal income tax consequences.
- For Third Party Revocable trust sub-accounts, no 1099 will be sent. The Grantor Letter replaces the 1099.