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Trusts considered 'tax shelter', can help minimize taxes

With Tax Day looming, many Lakeland residents will ask themselves how they save more money. Everyone would prefer to keep their cash in their pocket, so it is wise to look at options to consider how one could avoid giving more of their money to the government in the form of taxes. Trusts have been called a 'tax shelter' thus insulating one's assets from tax implications one may otherwise experience without a trust.

Trusts are appropriate for those considering establishing or managing one's estate. This is often desirable when transferring personal or business assets from one generation to the next or to a spouse or other important person. You can manage the trust directly or allow it to 'self-manage' depending on how you want the assets to be allocated or managed. Revocable and irrevocable trusts function differently in this way, one type of trust may be preferable over the other depending on a person's financial situation both now and the desired future outcome of the estate.

A tax shelter is a legal strategy that is employed to reduce the amount of income taxes one may owe. They are often unfairly categorized as 'shady' or illusive, however many tax shelters are perfectly legal. A trust is an accurate representation of a legal tax shelter. When accurately constructed and managed, a trust can be a great way to avoid paying excess taxes.

If you are reading this and thinking about all the money that could potentially be saved by a trust, the wheels are already turning. Take the next step by organizing financial documents and assets into a visible format and understanding which assets could benefit from trust administration by researching or discussing with a professional. Trusts could completely change the outcome of your taxes.

Source: huffingtonpost, "3 Tax Shelters that Save You Money," March 24, 2017

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