Oct 16 – Dec 31 · Planning Season
2026 Year-End Planning Summary
The family trust reaches the top 37% bracket at just $16,000 of taxable income; a §663(b) 65-day-election distribution to the two lower-bracket beneficiaries is worth an estimated $6,000–$11,000 in shifted tax, but requires a proper DNI computation and tier ordering across all three beneficiaries first.
Each move as a range, stepping down from the current-path liability.
§663(b) 65-day election — shift undistributed trust income to lower-bracket beneficiaries
Establish a standing DNI computation separate from trust accounting income
Addressed by the plan
1 of 2 quantified · 1 enable the rest without a separate figure
Time-sensitive moves before December 31.
Multi-year planning to revisit beyond this season.
Items to resolve before the client conversation.
If part of the planned distribution will be securities rather than cash, §643(e) defaults to carrying out the lesser of the trust's basis or fair market value, with the beneficiary taking a carryover basis — but the trustee can elect to recognize gain at the trust level and carry out fair market value instead, which can be the better outcome where the trust has offsetting losses or the beneficiary would face a higher rate on the gain than the trust would. This needs to be resolved before the distribution is finalized, not after.
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