In an aside, the rule that I was thinking of concerned Qualified Dollars (401K, IRA, SEP's, 457 plans) not Life Insurance Benefits going into trusts. I highly recommend if you ever receive a large some of money, don't start spending, contact a CPA or qualified tax preparation professional.No problem! You gave me a little scare there. I thought I might have missed something.
Yeah, she should have caught it. The IRS may not help at all. They're often not helpful if it's not just a textbook problem you can answer off the website. And I still think the 1099 was mis-issued. It should have been a MISC, not an INT.
Best of luck turkeyrun. Let us know how it turns out.