What is a tax-free trust?

A tax-free trust is an estate planning tool used by individuals to help reduce the amount of taxes they must pay on their assets. It is a legal trust established in accordance with the laws of the state of Florida that allows the trustmaker to transfer their assets into the trust while avoiding certain tax obligations. The trust holds title to the assets and makes distributions to the trustmaker’s beneficiaries as directed by the trustmaker. The trust may be funded with cash, investments, real estate, or other assets. The trustmaker (or grantor) will typically name themselves as the trustee of the trust. The trustee has the authority to make decisions regarding the trust and can make distributions to the trustmaker’s beneficiaries. The trustmaker can also appoint a successor trustee to take over the trust in the event of the trustmaker’s death or incapacity. Once the assets are transferred to the tax-free trust, they are protected from taxes. This is because the trustmaker can choose the type of trust that will be used and can determine which tax obligations will be avoided. For instance, some trusts may not be subject to federal and state taxes on capital gains or inheritance taxes. The tax-free trust is a powerful tool for estate planning and can provide substantial tax savings to the trustmaker. However, it is important to consult with an experienced estate planning attorney before establishing a trust in order to ensure that it is properly and legally structured.

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What is a tax-free trust?

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