How does an asset protection trust impact taxes?

An asset protection trust (APT) is a type of trust that is used in Ohio to protect certain assets from the claims of creditors. The trust is created and administered by a trustee, and the assets are placed into the trust. The trust then owns the assets, instead of the individual or business. The trust also has an impact on taxes as it provides certain tax advantages. The most common tax advantage of a APT is that it can provide tax deferral. In Ohio, income from the assets in an APT is not taxed until the trust is terminated and the assets are distributed. This allows assets to grow in value without being taxed each year. Additionally, some assets are not taxable at all when held in an APT, such as capital gains. An APT also allows for taxes to be minimized on assets that need to be distributed. For example, those assets can be distributed to heirs and beneficiaries by the trust in a way that reduces the tax burden, such as by using certain tax credits or exemptions available to trusts. In conclusion, an APT can have a significant impact on the taxes that are paid on the assets in the trust. Tax deferral allows the assets to grow in value without being taxed each year while also allowing for the taxes to be minimized when those assets are distributed.

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How does an asset protection trust impact taxes?

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