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Family of 5 siblings are beneficiaries of a beach house in a revocable trust whose grantor has passed away. Siblings are considering either leaving the asset in the trust, which would become irrevocable, or establishing a Family LLC. If the Family LLC is not a partnership, is tax reporting still done on a Form 1065? If there is no income from the property, how are real estate taxes, etc., deducted to the family members?
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Deed is currently in the name of the irrevocable trust? If so, why not simply keep the trust (perhaps as the grantor intended)? Would a new entity follow the grantor's original distribution provisions? Will you have to pay a transfer tax if the deed is transferred to a new entity?
Ask legal counsel since you are really in the middle of a long-term, estate planning exercise for potentially multiple families (e.g., where the spouse of one sibling is never going to agree with the spouse of another).
Ah, the non-tax reasons associated with trusts.....those possibly BOI-exempt entities!!
