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Douglas V. Willcuts Today: The Income Tax Problems Of Using Alimony Trusts, Alan Gunn

Journal Articles

Using a trust to satisfy a husband's' obligation to support his wife after divorce can be an appealing option. However, a trust in connection with divorce generates taxation problems, such as whether the husband or the wife should be taxed for trust income. Three fundamental questions arise from this problem: (1) Should a wife who receives trust payments meeting the requirements of section 71 be taxed in full on those payments, or taxed only on payments characterized as distributions of trust income under the trust conduit rules? (2) Should the husband or the wife be taxed on the income of …