In this lesson, Nick Palazzolo, CPA, breaks down the intricacies of trusts, starting with the basic differences between simple and complex trusts, which are crucial for understanding tax implications and estate planning. Nick helps unravel the rules concerning distributions and limitations, such as how simple trusts are required to distribute all current income and are not permitted to accumulate income or distribute the principal. He provides a clear distinction between the distribution and deduction rules applicable to simple and complex trusts, including the different exemption amounts they receive. Nick also touches on grantor trusts, laying out the control retained by grantors and the implications for personal tax reporting. Armed with key points and a practical approach, this lesson illuminates the characteristics and purposes of each type of trust without delving into unnecessary complexities.