What is a simple trust?

A simple trust is a type of trust that distributes all of its income to its beneficiaries and does not retain any income for the trust itself. The beneficiaries of a simple trust are typically individuals or charities, and they will pay taxes on the distributed income. The trust is often used to manage and distribute assets to beneficiaries while minimizing taxes. Simple trusts are also sometimes referred to as "grantor trusts" or "revocable trusts." Unlike other types of trusts, simple trusts do not allow for the accumulation of income or the distribution of principal. Simple trusts are often used in estate planning to help ensure a smooth transfer of assets to heirs after death.