We had a client pass who left 1/3 of his estate to his second wife in a marital trust. The wife was going to be allowed to the income from the trust and the the two grown sons would be entitled to the remainder. The second wife was not the boys mom so there is bad blood already.
The income was deemed not high enough for the spouse so they agreed to a monthly distribution far in excess of the income earned. There is a corporate trustee involved who is granting every request of the second wife. In addition, the corporate trustee seems to always agree to additional distributions for items that do not seem warranted. (ie minor repairs, minor medical procedures, etc).
But here is my question. Even with the distributions far exceeding income, the income taxes are being paid at the trust level and being charged to principal in the trust accounting. Shouldn't the wife be getting a K-1 and paying the taxes? The taxes are significant, tens of thousands.