Do Trusts Provide Tax Efficiency?

You have certainly heard of the legal device called a last will or last will and testament, and it is likely that you are also aware of the existence of trusts. Many people assume that all trusts are created equally, but in reality, different trusts serve very different purposes. Let s look at some of the details. Revocable Living Trusts A revocable living trust is a type of trust that can be useful if you want to facilitate timely asset transfers to your loved ones. The transfers would not be subject to probate, which is a time-consuming and often expensive process. If you use a will, probate would enter the picture, and your heirs would have to wait out the process of probate before they could receive their inheritances. This type of trust would not provide tax efficiency. If assets in the trust earn income, you would be required to claim the income when you file your tax return. Plus, assets in a revocable living trust would be looked upon as part of your taxable estate for estate
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