052: Fiduciary Accounting Income vs. Taxable Income with Justin Miller
Trust and estate income sounds simple until three different definitions collide. Sam Price sits down with Justin Miller, National Director of Wealth Planning at Evercore Wealth Management, to sort out the confusion. Justin has spent his career untangling fiduciary accounting income, taxable income, and the infamous DNI, distributable net income, and he walks through exactly why they rarely match and why that gap trips up even seasoned practitioners.
Justin explains Section 643, the treatment of specific bequests, and the Kenan gain trap that catches trustees off guard when they distribute appreciated property instead of cash. He also breaks down why sub-chapter J's exceptions to individual tax rules matter so much, and grounds each concept in real scenarios, including a mediation Sam is prepping for right now.
Anyone advising trustees or beneficiaries will walk away with a sharper read on where trust income tax actually gets decided.
In this episode, you will hear:
- Three competing definitions of "income" for trusts and estates, and why mixing them up causes so much confusion
- Fiduciary accounting income explained, including California's new Uniform Fiduciary Income and Principal Act
- Distributable net income (DNI) under Section 643 and how it decides who actually owes the tax
- Why specific gifts and bequests carry no tax consequences, while other property distributions do
- Kenan gain and the hidden tax trap in distributing appreciated property instead of cash
- A real 1940 court case that still shapes how trustees handle distributions today
- Practical guidance for trustees weighing a beneficiary's request to swap cash for property
Resources from this Episode
The 6-Stage Probate Process: How to Navigate California Probate: https://a.co/d/82310Rw
https://www.linkedin.com/in/justinmilleresq/
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