The 65-day rule can give certain trusts more flexibility when deciding when to distribute income to beneficiaries. The IRS may treat an eligible distribution made during the first 65 days of a new tax year as though it occurred in the prior year. This can potentially shift taxable income from the trust to beneficiaries. Because trusts can reach higher federal tax brackets at relatively low levels of taxable income, the timing of a distribution could affect the combined tax burden of the trust and its beneficiaries. Here’s how the 65-day rule may provide some flexibility.
A financial advisor can help you evaluate how trust distributions fit into a broader tax...
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