Getting Started for 2010

John Ralls jralls at ceridwen.us
Tue Apr 20 10:16:07 EDT 2010


On Apr 20, 2010, at 6:27 AM, James Kerr wrote:

> On Tuesday 20 April 2010 Mike or Penny Novack wrote:
> 
>> CFreestone wrote:
>>> Thank you for this  opportunity. We have just installed gnucash
>>> and I am trying to learn how to navigate around.
>>> 
>>> Our situation is that we have a revocable trust which owns all of
>>> our assets, and rents out three units (two offices and an
>>> apartment).
>>> 
>>> We do our day to day business from our personal check book.
>> 
>> Stop right there.
>> 
>> We can advise you how to make USE of GnuCash instead of old
>> fashioned accounting pen and ink on paper. But we can't advise
>> about the accounting requirements themselves, especially when in
>> reference to a situation which is clearly special. And we probably
>> shouldn't be advising how to get around the problems introduced by
>> co-mingling of funds.
>> 
>> If you found yourself in need of a revocable trust holding your
>> assets I think you need professional accounting help to set up:
>> a) the trust's books
>> b) the business's books
>> c) your personal books
>> And to show you how transactions between these should be handled. 
>> Don't even think of trying to do this in one set of GnuCash books
>> (one installation of GnuCash can handle any number of books). And
>> you should really think long and hard whether not having a
>> separate checking account for the business is a good idea (you can
>> handle the then rare times where you used your personal account to
>> pay a business expense  as a liability of the business to you that
>> is later reimbursed).
>> 
> 
> In addition to that excellent advice, I would add that you may have 
> legal (and tax) problems by commingling trust and personal assets in  
> a single bank account as you seem to be doing. If you haven't already 
> done so, you should take legal advice about that.

You guys need to calm down about the rev trust. It's a common estate planning vehicle in the US, and it's generally structured so that the grantor can continue to run his affairs as if it didn't exist, filing taxes on a 1040 with his social security number and so on. When the grantor dies or becomes unable to manage his affairs, a successor trustee takes over with no legal messiness (no conservatorship, no waiting for a court to grant letters of executorship or administration). At the grantor's death or permanent incapacitation the trust becomes irrevocable and the successor trustee gets a new tax id number and files subsequent taxes on a 1041.

It's also perfectly normal for a sole proprietorship (single owner, no employees, like a consultant or as in this case someone with a couple of rental properties) to commingle his business and personal finances. Tax returns for the business are reported under the proprietor's social security number on form 1040 Schedule C.

I'm not an accountant, but I've had a rev trust for years, and my mother had one for which I was the successor trustee. It just isn't that hard.

That said, it doesn't hurt to have an accountant help to set things up if one is unsure of one's accounting skills. I had an accountant help me when I first had my trust set up -- mostly with taxes, which are a bit involved for me. After a couple of years he told me that I didn't need him any more.

Regards,
John Ralls



More information about the gnucash-user mailing list