'My father placed his $600,000 Wisconsin home into a revocable trust, naming my brother as beneficiary'

"If my niece and her mother continue living in the home, are there any special tax or trust considerations?" (Photo subject is a model.)

Dear Quentin,

Over 20 years ago, my father placed his $600,000 Wisconsin home into a revocable trust, naming my brother as beneficiary. I am now co-trustee with my father. This has been an emotionally difficult time.

My brother has advanced cancer with a poor prognosis. We amended the trust so that if my brother predeceases my 94-year-old father, his inheritance passes to his 19-year-old daughter. The trust also provides that the house (or proceeds) remains in trust until my niece turns 25.

My questions:

-- After my father dies, will the trust need its own Employer Identification Number (EIN) even if the house is not sold?

-- If my niece and her mother continue living in the home, are there any special tax or trust considerations?

-- If the home is sold before my niece turns 25, I assume the proceeds would remain in a trust account?

We have an appointment with our estate attorney, but I would appreciate any general guidance.

My brother has very few assets outside the trust. We are also updating his estate-planning documents, and he plans to name my niece as his primary financial and healthcare agent, with her mother and me as backups.

I am the closest family member, so I've been taking my brother to treatments, helping manage his care and maintaining his property. If I lose both my father and brother in a short period, I expect to be responsible for administering the trust and managing the house for my niece.

Fortunately, I have a close relationship with both my niece and her mother, and I've also been able to help support my niece's education through a 529 plan established when she was born.

Thank you for any insights in trying to be all things to all people.

Son & Brother

Related: 'He's never been good with money': If I set up an annuity for my brother, 65, would it jeopardize his Supplemental Security Income?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

If they're living in the house rent-free, there won't be rental income to report and, as such, no taxes.

Dear Son & Brother,

Make sure you don't end up holding up everybody else's world. You're dealing with a lot: the potential loss of your brother and the collective and personal grief if he dies before your aging father, in addition to the financial responsibility of managing this $600,000 trust.

The biggest takeaway from your letter is that you can't deal with all of this alone. You need a team, and you certainly need an accountant and a trust-and-estate attorney to help you navigate the trust and the house contained in the trust.

With your brother's illness, you are shouldering a physical, emotional and legal burden. You may already be grieving the possibility of loss while your brother is still here and while you are actively helping him through his exhaustive cancer treatment.

Everyone has limits and there's no shame in that.

This is the kind of situation where you can learn to lean on others - family and friends, or even a support group, a counselor, clergy or a caregiving network - before you reach your breaking point. This could be a years-long process and you also need to protect your mental health.

Know your limits. Everyone has them, and there's no shame in that. If you do become trustee, you must follow the trust terms and act in your niece's best interests - and resist being the receptacle for endless familial requests.

Carrying the weight for a sibling and parent comes from a place of love and duty, but doing too much can lead to burnout. Being a dependable family member often means putting your own needs after other people's problems.

Decide which legal tasks you are able to manage, and communicate those limits to your family and trust-and-estate lawyer. Setting boundaries with others is not a selfish act. On the contrary, it helps ensure that you can continue to be present.

Related: 'Her bank accounts were stripped bare by Medicaid': My late friend had $20,000 in credit-card debt. Will her life insurance pay for it?

When the trust becomes irrevocable

To answer your other questions: The trust will require its own EIN for tax returns. While your father is alive, his revocable living trust is generally treated as a grantor trust, so it uses his Social Security number and doesn't file a separate fiduciary income-tax return.

When your father passes away, the trust then becomes irrevocable and obtains its own EIN - allowing you to open trust financial accounts under that EIN, which is linked to the trust rather than whether the house is sold or not.

There will almost always be tax considerations depending on who lives in a family home - relatives, beneficiaries or tenants - as long as the trust allows your niece and her mother to continue living in the home and you agree on property taxes, insurance and maintenance.

When your father dies, the trust becomes irrevocable.

If your niece's mother lives there rent-free, the trustee should be comfortable that doing so benefits your niece and there should be no rules forbidding it. If they're living in the house rent-free, there won't be rental income to report and, as such, no taxes.

If the trust requires the proceeds to remain in trust until your niece hits 25, the sale proceeds stay titled in the trust and are invested in trust-owned accounts. Any investment income - interest, dividends, capital gains, etc. - is reported by the trust.

Single individual filers do not reach the top 37% federal income-tax bracket until taxable income exceeds $640,600. In contrast, a nongrantor trust reaches the 37% top rate on undistributed taxable income above just $16,000.

"Trusts can be effective tools to help manage and protect your assets and may reduce or even eliminate costs related to wealth transfer, such as probate fees and gift and estate taxes," according to Fidelity. "But there are trade-offs to consider."

Have a team, and don't forget about your own needs.

Related: 'Her bank accounts were stripped bare by Medicaid': My late friend had $20,000 in credit-card debt. Will her life insurance pay for it?

More columns from Quentin Fottrell:

'He's never been good with money': If I set up an annuity for my brother, 65, would it jeopardize his Supplemental Security Income?

'I don't wish to be cold-hearted': My elderly relative can no longer care for himself. Am I wrong to leave his care to the state?

'There is zero transparency': My friend's sister controls their mother's estate. How can we stop her from stealing?

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-Quentin Fottrell