SubscribeWe must pay income taxes when income is generated. Making substantial gifts to others may lead to gift taxation. Estate (death) taxes may come into play when your property is passed to heirs after death.
In today’s America, taxes are as common as an apple pie. Many families are losing a big chunk of their income and wealth to taxes.
Financial products and services aimed at tax reduction are in high demand. Slogans and descriptions implying “tax savings” have a pretty high appeal to taxpayers. In some cases, the claims of tax savings are true. In other cases, such claims are highly exaggerated and outright untruthful.
Living trusts are no exception. “Saving taxes” is what compels many people to set-up living trusts.
Unfortunately, this conflicting information comes from sources that may appear to be reputable by consumers. Such sources include attorneys, CPAs, financial and estate planners, consumer groups and government entities.
So, do living trusts save taxes? The answer is pretty simple. It depends on the type of trusts you set-up and fund.
Revocable living trusts do not affect your tax liabilities one way or the other. Any tax planning you can do with such trusts can be done by other means. These “other means” are frequently much less costly and time consuming than living trusts.
If saving taxes is your only concern, you can achieve this goal without setting-up revocable living trusts.
Irrevocable trusts, on the other hand, can be used to reduce the tax burden. Such tax reduction can be very substantial. Properly designed and drafted irrevocable living trusts can indeed reduce your income, estate and gift taxes.
Irrevocable trusts can also provide an additional layer of protection against potential creditors.
Living trusts require your time and resources. But, they can help you achieve goals not possible with other planning tools. Whether or not your trusts can save taxes depends on the specific trusts you set-up.
Igor Krishtul, ChFC, EA is a financial and estate planner. He is also a mortgage consultant. Igor provides services primarily in Metro New York and surrounding areas. But, regardless of where you are, you should take advantage of valuable information and resources by visiting his websites. You will find more articles, free special reports and much more at http://www.ikinfocenter.com, http://www.nymortgageinfocenter.com and http://www.igormailbox.com
Article Author :Igor_Krishtul
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