Video: Introduction to Trusts

In this lesson, Nick Palazzolo, CPA, takes a dive into the essentials of trusts, demystifying their nature as distinct legal entities and outlining the roles and responsibilities involved in their creation and operation. Through a candid discussion, he delves into the fiduciary relationships that underpin trusts, differentiating between the concepts of principal, or corpus, and income within the trust context. Emphasizing the importance of understanding the terms, Nick explains how trusts function as separate income taxpaying entities, with particular tax rules and implications for both the trust itself and the beneficiaries. He also provides insight into how income generated by the trust's assets gets taxed and the tax treatment upon distribution to the beneficiaries. By breaking down these concepts, Nick ensures that the foundational knowledge of trusts is clear, setting the stage for deeper exploration in subsequent lessons.