Tax Planning Services: Understanding Trusts

One of the most rewarding things about our tax planning services is saving you money. A trust is just one way you can save tax by planning ahead. Discussing what will happen to your assets when you die, isn’t always comfortable, but it’s a conversation that can save a considerable amount in estate taxes.

While setting up a trust can save you a substantial amount of tax, it’s important to understand the different types of trusts as well as how they can save you more before deciding if setting up a trust is the right thing for you and your tax situation.

How Our Tax Planning Services Can Help

We have experience dealing with the tax implications of trusts and can help you explain the technical tax side of things to your family. Planning for the future is something that shouldn’t be taken lightly. You’ve worked hard to build your business and maintain your assets.

You need a plan for how those assets will transfer to your beneficiaries in the most tax-efficient way possible. A trust can help with that.

Types of Trusts

When it comes to dealing with trusts, they have their own language and set of terms. When discussing trusts, it’s important to know what a grantor, trustee, and beneficiary are.

A grantor is a person who creates trust. It’s their assets that are going into the trust. A beneficiary is a person or people who receive the assets from the trust, and a trustee is a person who administers the trust.

The trustee and the grantor can be the same person, but if this is the case, the grantor will have to name a trustee to take over after their death. This should be someone who can be trusted to make decisions in the beneficiaries’ best interests.

  • Revocable Trust

A revocable trust is one where the grantor can take their assets out if necessary.

  • Irrevocable Trust

An irrevocable trust is one where the grantor can’t access the assets in the trust. With an irrevocable trust, the assets are tied up until the grantor dies.

How Trusts Save You Money

You might be wondering if registering assets jointly with your beneficiaries will have the same effect as a trust. The problem with doing this is it could affect the taxes your beneficiaries pay depending on the type of assets in the trust.

A trust is its own entity, which means beneficiaries aren’t taxed unless they withdraw money or other assets from the trust. If assets are transferred into a trust before a taxpayer dies, this can minimize the taxes paid by their estate.

There is also flexibility around when beneficiaries withdraw money from a trust, which means there is the opportunity for tax planning for the beneficiaries as well.

In many cases, a trust also allows you to avoid state probate requirements and the associated fees. If you think a trust might be right for your tax situation, or to learn more about our tax planning services, schedule a call today.


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