With her near-sightedness, and those tremulous fingers of hers, at once inflexible and delicate, she could not be a seamstress; although her sampler, of fifty years gone by, exhibited some of the most recondite specimens of ornamental needlework.
State taxes on family trusts vary, but federal laws require family trusts to pay taxes on income it keeps but not on any that is distributed. A trust that earns $50,000 and distributes it all to trust beneficiaries pays no income tax. The beneficiaries pay income taxes on funds given to them.
If you have substantial assets, a living trust can also reduce federal estate taxes. In particular, joint living trusts designed for married couples can be especially effective in reducing or avoiding estate taxes. In 2009, the estate tax exemption increased to $3.5 million each or $7 million per couple.