OK here you are getting the benefit of my decades of practice as a tax accountant, mortgage broker and real estate sales person.
First, distributions from a trust are not taxable to the beneficiaries as long as the trust has paid tax on the income prior to distribution. Trusts can either pay out the trust income and let the beneficiaries pay the tax or the trust can pay the tax. So, no tax document is required from the trust to the beneficiary as long as the trust paid the income taxes on the money distributed to the trustee. You have 3 years of bank statement showing the receipt of this money. That along with a letter from the trustee confirming the start date, regular amounts/frequency of the payments and confirming that the payments will continue for at least 3 years will suffice.
This is a case of a loan officer, processor and underwriter not having a clue as to how to handle your wife's income. Good luck.... more