Living trusts do not inherently save taxes. There are principally two taxes to discuss when talking about living trust taxes and these are income tax and estate tax. The most common type of living trust is a revocable living trust.

If you have a revocable living trust, you can revoke it at any time. You can name yourself as the trustee and use the assets in the trust however you like. You control it. So for tax purposes, income earned by that revocable living trust is attributed to you as trustee of the trust. You will pay income taxes on the income the trust earned just as if it was your income. While you are the trustee, no separate income tax returns are required to be filed for living trust. You will simply report the trust's income and deductions on your personal return.

Your social security number will be the taxpayer identification number for the trust.

After your death, the trust becomes a separate tax entity and pays its own income tax. At this time the successor trustee will need to get separate taxpayer identification number for the trust to report its own tax returns and pay its own income tax.

The second type of tax that is involved is estate taxes. Assets in your revocable living trust will be considered part of your estate and will be subject to estate tax. Whether estate tax will have to be paid will depend on whether your estate is valued above or below the estate tax exclusion amount at the time of your death.

There is simply no inherent tax advantage to placing assets in a normal, revocable living trust. However, it is a different story for irrevocable living trust.

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