My client is the individual (not the executrix or the trust). The individual receives a Schedule K-1 (1065) in the name and EIN of her trust. I believe each sibling receives one as well.
If I understand you correctly, the following should occur:
(1) Individual receives K-1 (1065) and CA state K-1 for her trust
(2) Trust should file Form 1041 and issue K-1 (1041) to individual. If the source state requires a trust tax return, then one needs to be filed as well.
(3) Individual reports income from K-1 (1041) on personal federal return and source state return.
is this accurate?