Lesson: Simple Trusts

In this lesson, Nick Palazzolo, CPA unpacks the intricacies of Simple Trusts and their tax implications. He delves into the requirement for income from Simple Trusts to be taxed at the beneficiary's individual rate rather than the trust's rate, emphasizing the necessity of understanding this concept. Using a relatable example, Nick demonstrates how a Simple Trust must distribute all income generated, such as $5,000 from an initial principal of $100,000, exclusively to the beneficiaries. He clarifies that distributions must come from the trust's current income and not from the principal, ensuring that the corpus of the trust remains untouched, which is a key take-home point for anyone navigating these aspects of trusts and taxation.