Tax Brackets for Living Trusts

by Rusty

What are the tax brackets like for a living trust? Same as an individual?

We have $200K in a trust for 5 grandchildren of my father, ages 2 - 13. The goal is to use this money for the kids' college expenses.

When the trust was set up, there were not 529 plans available.

We are trying to quantify how much taxes we may pay on the money, to help decide whether the account should be turned into 529s.

Separately, we must also decide whether the aims written into the trust document align closely enough with the rules of a 529 to do this.

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Aug 20, 2010
Taxes on Living Trusts
by: Mo Johnson

Well, I can tell you that there really are no inherent tax advantages to a living trust. So, yes, if an individual puts assets into a living trust that the individual controls, then income the trust earns will be taxed as if owned by the individual. This is discussed more at Living Trust Taxes.

As for the 529 plan, here's a link to a Kiplinger Article that discusses tax implications of opening up Section 529 plans -- including possible gift taxes.

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