Does a living trust save taxes?
The grantor of a revocable living trust retains control of the trust property. Therefore, for federal income tax purposes, as long as you act as the trustee or the co-trustee and the trust uses your social security number for its taxpayer identification number, your living trust will be treated no differently than if you had not created the trust. Likewise, you will not save any death taxes (state or federal) simply because you have created a living trust since you have not irrevocably disposed of the trust assets. Although, a properly prepared living trust can save death taxes, exactly the same savings can be achieved by a will.
Living Trusts are not designed to save on taxes at death. Assets in a Living Trust are fully taxable in the individual’s estate. However, with the proper use of a revocable trust, the federal estate tax will not apply to most married couples – this is the result of the federal martial tax credit. Once I sign my Trust document, can I change my mind? Yes. While you are alive and competent, you are in complete control of your trust. You may change or terminate the trust at any time provided the trust document specifically gives you that right.
