I'm Giancarlo Enrico S. Pozon, a Wushu instructor, investor and Barrister... That's right, Barrister; I graduated from law school and took the Bar Exams, now I'm waiting for the results. I created this blog to make Philippine Law easy to understand for the average person. It's all about free legal advice. There are many law blogs. But the problem is that many of them are written for lawyers and law students. They use words that can't be understood by ordinary people.
Many lawyers, judges and law students consider themselves as superior to most human beings because of their knowledge of the law. It bothers me since the law is supposed to serve society. Since the law is meant to serve society as a whole, it is important that is must be understood by everybody.
This does not mean that we should all become lawyers. It means that although law is a highly specialized profession, the first duty of everybody in this profession is to make the law understandable to all; that's why all these articles are free legal advice.
Like I said, this blog is about law -but it's for the ordinary people, not the lawyers. It's for the ordinary folk so they will know what is good and bad for them, and that making them aware of the law will help us all improve society as a whole. This is free legal advice for everybody!
After taking up this article, we move further into discussing the taxation of trusts.
Revocable Trust
When a revocable trust is created, the grantor can regain title to any part of the trust's corpus in any of the following cases:
1.) The grantor alone or in conjunction with any person who doesn't have a substantial adverse interest in the disposition of the corpus or its income
2.) Anyone who doesn't have a substantial adverse interest in the disposition of the corpus or its income
The trustee/fiduciary is the one who files the return and pays the tax for the trust. The gross income of the trust is the same as an individual taxpayer's. Because of this, the trust is subject to the following deductible expenses:
1.) An individual's deductible expenses
2.) Income of the trust distributed to the beneficiaries
3.) Income collected by the guardian of an infant (held/distributed in accordance with the orders of the court)
The personal exemption of a trust has the same issue as that of an estate's exemption. Ergo, the exemption of Php20,000, as my teacher says, should be Php50,000. Also, a trust's accounting period is the same as an individual taxpayer's.
When the same grantor creates 2 or more trusts in favor of the same beneficiary, the exemption is deducted from the total income of the trusts and the trustees of each trust proportionally bear the taxes. If 2 persons create 2 separate trusts for the same beneficiary, both trusts will be taxed separately and each will be entitled to its own deductions.
The trustee/fiduciary is the one who files the return and pays the tax for the trust. The gross income of the trust is the same as an individual taxpayer's. Because of this, the trust is subject to the following deductible expenses:
1.) An individual's deductible expenses
2.) Income of the trust distributed to the beneficiaries
3.) Income collected by the guardian of an infant (held/distributed in accordance with the orders of the court)
The personal exemption of a trust has the same issue as that of an estate's exemption. Ergo, the exemption of Php20,000, as my teacher says, should be Php50,000. Also, a trust's accounting period is the same as an individual taxpayer's.
When the same grantor creates 2 or more trusts in favor of the same beneficiary, the exemption is deducted from the total income of the trusts and the trustees of each trust proportionally bear the taxes. If 2 persons create 2 separate trusts for the same beneficiary, both trusts will be taxed separately and each will be entitled to its own deductions.
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