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Simple Trust


A Simple Trust is a trust that must distribute all of its income each year.  Generally, the trust itself is not allowed to accumulate any income, distribute any of the trust assets, or pay money for charitable purposes.  If a trust distributes any assets during the year, then the trust becomes a complex trust for that year.  A trust may be a simple trust one year and then a complex trust in the next year. Whether a trust must distribute all income currently depends on the terms of the trust instrument and applicable local law.  The fiduciary must be under a duty to distribute the income currently even if the income is not distributed until after the close of the taxable year of the trust.