What taxes can I avoid with a trust?


Income Taxes are not affected by a revocable trust. You file your income taxes the same way you did before creating a trust. No additional tax returns should be filed for your trust. IRS Regulations require that a trust uses the tax identification number - your Social Security Number - as the trust's identification number. Please refer to your tax advisor with any questions.


What are Gift and Estate Taxes?

Federal tax law gives every individual a "Unified Gift and Estate Tax Credit." This exemption is the amount of your assets which can pass to your heirs “estate tax free”; there is an unlimited deduction for assets passing to a surviving spouse.

President Donald Trump signed tax legislation into law ushering in several changes to the wealth transfer tax system, which will take effect on January 1, 2018. Under the new law, the federal estate, gift and generation-skipping transfer (“GST”) tax exemption amounts will increase to $11,200,000 for individuals and $22,400,000 for married couples, from $5,490,000 and $10,980,000, respectively, in 2017. These exemption amounts are scheduled to increase with inflation each year until 2025. On January 1, 2026, the exemption amounts are scheduled to revert to the 2017 levels, adjusted for inflation. The highest marginal federal estate and gift tax rates will remain at 40% and the GST tax rate will remain a flat 40%.

In addition to the increased exemption amounts discussed above, the amount each person may give annually to as many individuals as he or she desires without incurring a gift tax and without using any of the gift tax exemption amount will increase to $15,000 in 2018 (up from $14,000 in 2017).