Trust Income Tax Basics

WealthManagement.com
Mar 21, 2019

Martin M. Shenkman 

Trusts are ubiquitous in asset protection and estate planning. Regardless of a client’s
wealth level, he should be using trusts to avoid problems such as a minor child
inheriting money outright; giving an adult child an outright inheritance, which is
risky due to the possibility of divorce; or subjecting a gift or inheritance to the reach
of a donee’s creditors. But whenever trusts are involved, the wealth planning
professional (whether a CPA, attorney or wealth manager) must understand how
the trust is taxed. Here’s an overview for those not familiar with trust income
taxation. We’ll define some of the jargon that makes this area of the tax law difficult
for many.

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