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Understanding Trusts and Property Tax Deductions

Setting up a trust is often perceived as a golden solution for avoiding probate, protecting assets, and saving on taxes. However, the reality of trust taxation can be nuanced and may not deliver the expected benefits. This article explores the different types of trusts, their taxation implications, and how property taxes may be deducted within these structures.

Types of Trusts

When discussing trusts, it is essential to understand the fundamental categories: revocable and irrevocable trusts. While there may be various types of trusts, keeping the explanation simple aids in understanding their basic functionalities and tax implications.

Key Definitions

Before diving into the types of trusts, let’s clarify some key terms: