Trust Planning for Tax Minimization refers to the strategic establishment and management of trusts to reduce the tax liability of individuals or businesses.
This planning involves creating trusts that can provide tax benefits, such as income splitting, capital gains tax exemptions, and deductions for estate taxes. By allocating income or assets to beneficiaries in lower tax brackets or utilizing specific types of trusts, individuals can effectively minimize their overall tax burden.
For example, a family may set up a revocable living trust to manage their assets during their lifetime and distribute them to heirs upon death, potentially avoiding probate taxes. Similarly, an irrevocable trust may be used to remove assets from the taxable estate, thus reducing estate taxes upon death.
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