Q: Do you have to pay taxes on a trust?
A: You need to consult with a CPA or tax professional with that question.
A: Trusts can be created while the creator/settlor is living, or at death via a Last Will. The creation of the Trust, or one's becoming a beneficiary to a Trust is not necessarily a taxable event. However, with inheritance, different states have different inheritance tax laws. LA has no inheritance tax. As to the Federal Estate Tax, it is at a combined (with lifetime gifts) $11M per individual; so, few estates hit that threshold. However, once the Trust is created and its principal/assets earn any income, that income is taxed to the Trust just as any income earned by an individual would be taxed. Thus, a CPA is usually involved to assist with the annual tax return filings for the Trust. This is a simplified answer and exact, tax consequences for your specific circumstances should be discussed with a CPA .
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