How Do Trusts Get Taxed? Basics of Trust Taxation & Can They Pay No Tax?
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- Опубликовано: 22 ноя 2020
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This was as clear as mud.
Just studying up on trusts.
This is very helpful
Thank you for such good information!
Always a pleasure!
Anything you'd like to see next?
would love to see a comparison between trusts and foundations and which ones are better for different situations.
Definitely will do
I like your video presentation. It is informative too, at the same time. Thanks a lot for your guidance!
A pleasure!
Anything you'd like to see next?
Definitely would have got a clearer understanding had we not used the Spanish law scenario.
May you do a video on trust tax residency? Especially if grantor hops from country to country and grantor tax residency changes
Greetings Chief. I thought you were going to miss the jurisdiction distinctions. Many don't address this, don't want to, or don't know about it. You are great.
Thanks. Always a pleasure!
Anything you'd like to see next?
would reccomend when you are doing the examples, I'm sure flow chart of some sort will help , they can even be ona a whiteboard
Quick question do you recommend a book that explain all these topic you talk about in detail!? Thanks
It's also important to note- something I had to catch in my studies. A trust and trust fund are different. A trust is an agreement or relationship. A trust fund is a legal entity
Not exactly
Depends how the term trust fund is used & again in what country
In some cases "trust fund" could refer to the assets held in trust
In some countries a trust is indeed considered an entity, in others it isn't the assets are held by someone else rather than just administered by someone else so lots of nuance to distinguish
Living Revocable Trusts or IRREVOCABLE Trusts upon death cant be altered, revoked modified, or terminated AFTER DEATH including if embezzled thru courts or by attys or anyone (its THEN illegal) and IRREVOCABLE LIVING TRUST BECOME 100% TAXABLE TO IRS, AND STATE REVENUE... Details please.
If you transfer your property (I’m a Uk resident and considering setting up a UK private revocable trust) in to a trust, and later are declared bankrupt as an individual, can the authorities repossess the property I previously owned that I placed in to the trust? Also, can you place a property in to a trust in the UK that has an outstanding mortgage on it to me as an individual? Thanks
Are beneficiaries of a Jersey islands discretionary trust responsible for paying taxes on earnings of the trust assets? The beneficiaries have no control over the trust as it is discretionary so does the IRS go after the individuals?
What are some contemporary issues in taxation of trust?
Can you recommend a video for someone who wants to live overseas for more than 6 months a year with only a PO Box or Mail Etc address in the USA ? Would this be a potential nightmare for my accountant ? Thanks
I often hear recommendations for real estate and securities to be placed in trust to avoid or minimize taxation, but it seems the flip side would be not being able to write off real estate expenses or tax loss harvest security losses. It's an unpopular view, but I avoid 401Ks and opt for a combo of maintaining a taxable securities account and a Roth. My rentals are individual LLCs. I've been on the fence regarding trusts, but will follow your channel for more insights.
Trusts avoid probate.
How did Nelson Rockefeller earn $140 million in one year and not pay one red cent in taxes?
The tax system was very different back then. People make the mistake of not realizing how these things have changed over time in part due to such incidents
Life insurance and foundations
Imagine being pissed at someone dead for 100 years
We didn't have an income tax 120 years ago.
Common law trust
Either the grantor or the beneficiary will pay the taxes. Taxes can be shared between the two. For example, the grantor pays taxes before depositing the funds and the beneficiary pays taxes for capital gains if trust funds grow.
Sometimes the trust itself will be taxable as well
Can you file for a tax deferment if the home is in the trust?
How gave tax law changed since Jan 2021?
Amazing and very valuable information, thanks for sharing!
Happy to be of service 😄
Anything you'd like to see next?
How about a unitrust, where one beneficiary receives 5% of the Trust's assets each year, and the other beneficiaries divide the residue when the first beneficiary dies? We are the first beneficiary, and the Trust is claiming that we should pay ALL of the Trust's taxes!
I think that the unitrust is NOT a trust as envisioned by the IRS, but rather it is a corporation who should pay the taxes from its holdings.
What are your thoughts?
Can we do this with a foreign grantor trust?
This is really good. Are you able to walk us through a Simple Trust that has Dividend (Qual & N.Q.), Interest including TSY int, and ST and LT capital gains? I'm struggling to find resources that explain the rules and math when a Simple trust distributes out all income but cap gains - like how much of each income (loss) and deduction item allocated b/w Trust (1041) and Beneficiary (K-1). THANK YOU.
Thank you!
The best first step is to send a message through our website, explaining your situation and circumstances in more details and we can go from there
Used the "Contact Us" on your website. I mentioned this video.@@OffshoreCitizen
Still a bit confused....say my wealthy father died leaves me ten to 20 million. It's taxed upon transfer to me. If I put that money in a trust and set up a spendthrift is it tax again every year or month I receive a distribution?
Depends what country you're in, depends how the trust is designed
If you're looking for specific guidance to you best is to book a call or send a message through www.offshorecitizen.net
So if I have an offshore trust(panama) with a charity as beneficiary (but not paid out right away) meaning the assets income is accumulating for so many years(say 20 years) if I managed the investing accounts if the Trust from Canada would the greedy government ask for tax ?
I inherited my parents property. I’m the sole beneficiary of the revocable trust. Do I pay taxes on it. Thank you for your information and video.
Hi, great video. @ 04:01 you mentioned about the idea of many beneficiaries under the trust, but did not develop the idea. Fist: how each of the beneficiaries will take advantage of the Trust (% of money for each, is there a difference or cap of money for beneficiaries like step brother / sister from a second marriage on the grantor side? in case there are profits within the Trust, and if the beneficiaries have to pay taxes, then will it be equally shared dues to all the beneficiaries ?). thanks.
Thanks! Lots to cover here and highly depends on all the other details involved, probably best to reach out. Not something that could be covered in a YT comment
Hey Michael, love your videos.
Q1: can you be a beneficiary or contributor to a Canadian trust while being a non-resident?
Q2: can you be a guarantor and a beneficiary of a trust at the same time?
If you put a house or condo into a trust and the beneficiary rents the property is the rent considered taxable?
Depends on the country & how the trust is structured. Usually that would be classed as a form of distribution from the trust but distributions from the trust aren't necessarily taxable depending. It typically isn't a way to avoid tax let's put it that way. Usually (lots of different laws by places and structures) if it's not taxable then it's because the trust level was taxable. But again you can't generalize
So In a trust, if taxed at the trust level and not beneficiary level are you still taxed on the appreciation of assets distributed to the beneficiaries?
Depends on the country and structure of the trust
Interesting. As a Living Trust is not public or filed anywhere, unless one is reporting income into the trust, how does the IRS even know it exists? If you have an LLC, there will be tax forms to file and theoretically tax liabilities are handled. Or, if you are earning creative Royalties on books, songs or movies, etc., it is income and will be taxed. So other than a lump of Assets contained within the Trust for the beneficiaries upon death of the Grantor, where does the IRS learn about the Trust? I am a bit confused about this aspect of a Revocable Living Trust, as you can tell.
As a starting point to get a bank account the trust needs to get an EIN
Great 👍 question ❓
With revocable trust the assets is still listed in grantors name so they will be filing 1040 on their personal taxes but if it’s irrevocable the assets is owned by trust not grantors therefore 1041 willl be needed to filed and the trust will have its own taxes to pay and would be its own entity therefore shielded from you personal taxes
vid starts at 1:30
If a Trust is unregistered, it's a private contract is it not? Private contracts are outside of the jurisdiction of the Government as a rule of law in the US.
Registration brings them into the realm of Ceasar. Thoughts?
No they are explicitly within the rule of law. Courts interpret based on substance not form
mother died august do i how do I do the taxes on a trust if its just a house? I do hers first the house payes property taxes only so its not making money
Depends on the country you should contact a local accountant
video starts at 1:16
I have a wealthy client in USA, Florida who has an offshore account that wants to acquire 1.5 million bitcoins but wants to create a trust via charitable donation to mitigate or avoid taxes is this possible???
You must mean $1.5 million worth of bitcoin.
There are some ways to use trusts yes
@@OffshoreCitizen No they want to purchase a total of 1.5 million bitcoins in totality
Pump it!!
Correct me if I'm wrong, but I believe the part you're missing is life insurance. The grantor gets life insurance policies and the payouts go to the trust fund, then they put that money back into the policy and get loans off the policy which aren't taxable. They aren't canceling their policy they're hedging interest in the market higher than the loan interest. And if they want anything it trickles down to business expenses or their non profit foundations. That's why Trump had a residence in all his hotels, the one in Trump Tower is an office. He's technically paying himself, but no money is moving. He sets the amount to write off because he owns the hotel and as long as he uses that for improvements or donates it to his own foundation it's not taxable. The foundation only has to use 5% for charitable acts. The rest is to "run" it.
It depends, the problem with generalizing trusts is
1. In what country?
2. Under what structure? Lots of ways to design trusts that can have different consequences. For instance is it irrevocable or not? Is the income paid out in the year earned or not? Are the beneficiary distributions discretionary or not?
Life insurance is usually separate to trusts with specific beneficiary or beneficiaries.
I'm the trustee of a testamentary trust that was a part of my mother's will. It is the 1/3 of the estate that went to my sister who has Alzheimer's. 100% of this money will go to her care. This is the first year. HAve completed my 1041 and Sch. D. The trust had a loss overall from a bunch of stocks that were sold to generate cashflow. But there was some minute interest and 3100 in dividend income (1099DIV) However overall a loss for the year by quite a bit so the trust doesn't owe any taxes. The trust will carry the tax burden on all this money. So do I need to file a k1 for my sister and give her husband a copy? If so, she shouldn't have to pay tax on the income generated as that would be double taxed. I'm all clear on the federal forms but stuck on the K1. Also do I need to file state taxes? My mother created this trust in FL - no state taxes - but I live in NY. I hope I am making sense. Thanks!!
Wow.
Trust as it is is very complicated, you try to expain it putting in different senarios and worse you add in Spain and America system. Try a smaller focal point. Or talk about Spain and america seperately. Dont waste clients' time be concise.
No the point isn't to give very specific information for that people can contact us or book a call.
It's too niche to justify very specifics
my family didn't use a Will only a trust with definitely under 1 million. I need to confirm that when applying for an EIN I click "Trusts", then "irrevocable" because they passed. If we went thru probate, then it would be "estate" EIN. Also, do you know what the sub question about section 645 or something being taxed as part of an estate means? Thanks.
hi, I am still learning here. I just saw in another video that (WILL) will go through probate, but (Trust) won't ever go to Probate.
Sounds a bit complicated.
I've just been on both web links. One does not work. The other, I have not been able to work out how to get in touch.
I am getting a passive income from FOREX trading and looking at what setup to have in order to pay 0% tax. I am thinking of setup a trust in a tax haven, and being the beneficiary. Would that work?
Please send a message through www.offshorecitizen.net
What a big rambling!
Uk law sane as usa?
No they are different but have similarities
Revocable Trusts become IRREVOCABLE TAX EXEMPT TRUST upon Grantors death. Trust only becomes taxable if they are embezzled from illegally and taxable to embezzlers
All taxes are voluntary in the U.S... unless your operating as a U.S citizen or through an IRS vehicle.
No that's nonsense
@@OffshoreCitizen Says it right on the IRS website. All taxes are voluntary. Personally i've gotten the irs to even back off my friend from the Sudan who has a green card with a simple one page 3 sentence letter via registered mail. They even apologized.
"Internal" revenue service. Domestic. U.S. Citizen = Domestic(Under congress)
Little known fact: There were no U.S Citizens prior to 1871 so what were ppl called before then?
@@OffshoreCitizen nonsense? are you lying or just mislead like the rest of the masses? I'd bet on lying
@@mackwitdavortexx love it, and of course no rebuttal from the guy making a living by misleading people
Very confused 🤔
"if you're in a jurisdiction with no tax"
there is no tax in the common law, the only way anyone, esp the government, can get jurisdiction over me is if there is an injured man or women swearing under oath that I hurt them
@Homestead - I don't think you quite understand where the "common law" originated, it came from the bench.
Common law is a body of law that does not come from a legislature, it comes from a judge's opinion. If you're in the United States, we still have a common law system known as "case law" - because it comes from judges and not a legislative body.
That's what common law is - the law handed down as a result of their decisions (aka...case law).
@@petesevern7638 that's false, common law ONLY comes from juries of We the People. American common Law has been codified into our bill of rights and the bill of rights of each state(all of which apply to every man or women no matter what state they are in and no matter what states constitution they use, it all applies
@@homestead685 "Pete Severn that's false, common law, ONLY comes from juries of we the people."
And I remember hearing that patriot mythology being passed around the Patriot community back in the mid-90s... at one time I even believed it too.
Google the common law and get an education as to where the common law originated.
"...the only way anyone, especially the government, can get jurisdiction over me is if there's an injured man or woman swing under oath that I hurt them."
Ahhh, more Patriot mythology.
Then how does a judge get the authority AND the jurisdiction to enforce a traffic citation for speeding.... When there's no injured party?
Explain that one to me Einstein.
A lot of mumbo jumbo
Trusts are not recognized, however, contracts are recognized everywhere, and a properly formed trust is also a private contractual agreement, which is upheld globally.
I don't get it. Is this pertinent to Americans? This dude doesn't sound American.
Yes this is relevant to Americans though each country has its own nuances
@@OffshoreCitizen Americans or US Citizens? big difference
Spanish rules.....really?????
Long winded
another liar.. lawyer sorry
seem like a boring nomad capitalist clone. nomad is also misleading people
Lemme guess, we’re all stuck in the matrix?
@@golfprogress not those who know how the law actually works which is a very small percent like .02