Whether you choose a Will or a Trust as your primary estate planning document, there will be tax consequences. Some of the tax consequences of a Living Trust are as follows:

Income Tax Consequences
Irrevocable Trusts: When the grantor or the grantor’s spouse is the trustee or co-trustee of the Living Trust, the grantor of the Living Trust continues to be treated as the owner of the assets that are now part of the trust. Thus, if you are the grantor of your Living Trust, you must report the income from the Living Trust assets on your individual income tax return in the same manner as you did prior to transferring the assets into your trust. If some other party is the trustee, the grantor is not responsible for paying income taxes generated by trust assets; instead, the trustee has additional tax reporting requirements.

Revocable Trusts: For income tax purposes, the grantor of a Living Trust continues to be treated as the owner of the assets that are now part of the trust no matter who is the trustee.
Gift Tax Consequences
The grantor must pay gift taxes whenever assets are transferred into an irrevocable trust. Revocable trusts are not subject to gift taxes, but will be included in the grantor’s estate for estate tax purposes.
Estate Tax Consequences
Estate tax savings provisions can be included in a Living Trust, but a Living Trust has no more estate tax savings potential than a traditional Will. The key cost saving difference between the two is the Living Trust’s avoidance of probate.
Because there are several kinds of Living Trust that help you avoid, reduce or postpone federal estate and income taxes, if you are interested in creating a Living Trust, contact an attorney.