07/09/2026
In case you missed it: here is how the double taxation actually works.
When a trust distributes income to a beneficiary, the trust has historically been allowed to deduct that distribution. The income gets taxed once, at the beneficiary level. That is how the system was designed to work.
Under the new deduction limitation in the One Big Beautiful Bill, a trust that has reached the top income bracket may not be able to fully deduct what it distributed.
For trusts, that bracket kicks in at approximately $16,000 in taxable income.
The result: the trust owes tax on money it already sent out. The beneficiary who received that money owes tax on it too. One dollar, taxed twice.
If the trust is obligated to distribute its income to a surviving spouse, a child with a disability, or anyone who depends on those payments, it now has to find money to pay a tax bill on income it no longer holds. That typically means one of two things: dipping into the principal the trust was built to protect, or going back to court to reduce distributions.
Neither outcome is what the trust was designed to do.
Read this week's article to understand whether your trust faces this problem and what the options are.
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