Q: Can distributions from estate to beneficiaries be withheld if they won't provide SS# number for K-1 Rental Income?
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A: No, those are two separate legal obligations. Trustee can be sued for breach of fiduciary duties and conversion for failure to distribute from Trust. But Trustee can (must) report income being transmitted to Beneficiaries, and the IRS will prosecute them if income is not reported.
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Yes, distributions from an estate can be withheld if a beneficiary refuses to provide their Social Security number for tax reporting purposes. The estate is required to issue a Schedule K-1 for any rental income allocated to the beneficiaries, and the IRS requires Social Security numbers for this reporting. Without this information, the executor or trustee may be unable to properly complete tax forms, which could cause penalties.
If a beneficiary refuses to provide their Social Security number, it can create complications for the estate’s tax filings. To protect the estate from tax liability, the executor or trustee has the right to delay distributions until all necessary information is provided. The beneficiaries' cooperation is crucial for completing the required tax filings.
It may be helpful to explain the legal requirement for this information to the beneficiaries, as it ensures that all tax obligations are met. Open communication can prevent further delays in the distribution process.
Kenneth V Zichi agrees with this answer
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