Do Crypto Trusts Save Taxes? Expert Take

Another avenue now being considered is a crypto trust.

Trusts can be taxed in several different ways, depending on their type.

Trust tax rules can be complex, but that means the trust itself pays the taxes.

Some trusts are foreign, meaning that they are set up outside the U.S. Those rules are complex, but if you are U.S. person, you should not assume that you can avoid U.S. tax with a foreign trust.

Some trusts are being set up with an eye to reducing or avoiding state taxes.

An emerging answer for the adventurous is a Nevada or Delaware Incomplete Gift Non-Grantor Trusts.

Parents frequently fund irrevocable trusts for children, and may not want the trust to make distributions for many years.

For tax purposes, most non-grantor trusts are considered taxable where the trustee is situated.

Outside of New York residents, the jury is still out on NING and DING trusts.

Still, California seems more likely to attack these trusts in audits rather than through the legislature.