As I noted in a prior article, states are all over the board on their income taxation. An individual in a state with a high state tax rate could use a nongrantor trust to hold some of their income-producing assets and thereby avoid state income taxation on the income from those assets. Briefly, trusts may be taxed as grantor trusts or nongrantor trusts. A grantor trust is taxed directly to the grantor, so this type of trust doesn’t help if you’re trying to avoid your state of residence’s … [Read more...] about State Income Taxation of Nongrantor Trusts
Nongrantor Trust
How Are Trusts Taxed?
Trusts can be very useful vehicles to control assets during life and after death. During life, they can be especially helpful to control assets during periods of disability. After death, a trust can provide asset protection, remarriage protection, asset management, and many other benefits which might not be available otherwise. Generally, trusts are income taxed in two different ways, as “grantor” trusts or “nongrantor” trusts. A grantor trust is one that is taxed to the grantor (or other … [Read more...] about How Are Trusts Taxed?
