An estate or trust is an entity that can be set up in order to protect your assets from excessive taxation.
Estates report income after an individual has become deceased. Typically estates are established when there is a passive income stream such as interest, dividends, capital gains or partership distributions. This income must be reported to the IRS. Estates pay a tax on the value of the assets in the estate which is typically referred to as the estate tax. There is also another taxation on the estate income which is different from individual income tax.
Trusts are a tax entity as well. A trust is established in order to protect an individual's assets. Typically we think of an inheritance as being protected by a trust however a trust might take effect upon a person's death in order to distribute income to beneficiaries. A trust is an entirely different entity than the person who created the trust. The trust needs to have its own income and tax froms.
With both estates and trusts there are many complexities to consider. While it is perfectly legitimate to use either to protect your assets the IRS heavily scrutinizes both types of entities in order to catch people using a trust or an estate to illegally hide income or assets.
The Tax Shelter has great experience in both entities. If you or a loved one is seeking guidance and professional assistance in the establishment of an estate or trust then contact The Tax Shelter today. One consultation could end up saving you thousands of dollars and eliminate heart felt concerns.