People often come to us curious — or confused — about the role trusts play in saving on taxes. Given how frequently this issue comes up, here we’re going to explain the tax implications associated with different types of trusts in order to clarify this issue. Of course, if you need further clarification about trusts, taxes, or any other issue related to estate planning, meet with us, your Personal Family Lawyer® for additional guidance.
Read MoreWhether you develop smartphone apps, offer consulting services, or brew craft beer, you are no doubt extremely talented and driven when it comes to your core product or service.
Yet, when it comes to the dry, nitty-gritty parts of running a business—crunching numbers, negotiating contracts, dealing with insurance, and managing taxes—you likely don’t have nearly the same passion or surety. You might project an outer facade of confidence about the state of your company, but you may secretly fear that it’s going to fail.
No matter who you vote for on November 3rd, you may want to start considering the potential legal, financial, and tax impacts a change of leadership might have on your family’s planning. As you’ll learn here, there are a number of reasons why you may want to start strategizing now if you could be impacted, because if you wait until after the election, it could be too late.
While we don’t yet know the outcome of the election, Biden could win and the Democrats could take a majority in both houses of Congress. If that does happen, a Democratic sweep would have far-reaching consequences on a number of policy fronts. But in terms of financial, tax, and estate planning, it’s almost certain that we’ll see radical changes to the tax landscape that could seriously impact your planning priorities. And while it’s unlikely that a tax bill would be enacted right away, there’s always the possibility such legislation could be applied retroactively to Jan. 1, 2021.
Many people come to us curious (or confused) about trusts and taxes. So today’s article is going to sort it out and clarify things for you.
There are two types of trusts, and each have different tax consequences.
Revocable trusts, which are the far more commonly used trusts, have no tax consequences whatsoever. A revocable trust has your social security number as its tax identifier, and is not a separate entity from you for tax purposes.
When you have an irrevocable trust, either created during life, at death through a revocable living trust, or through a will that creates a trust, that trust has its own EIN, or employer identification number (also called a TIN or taxpayer identification number).
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