TRUST: The One Mistake That Could Cost You Thousands
Trusts are everywhere these days. Open Instagram, TikTok, or YouTube Shorts and you’ll see an endless stream of creators saying the same thing: “Put your assets in a trust! Protect everything! It’s what wealthy people do!”
After watching enough of these reels, even the smartest entrepreneurs start thinking, “Maybe I should do this too.”
And that’s where the danger begins.
Because what most people are getting isn’t real tax planning. It isn’t a real wealth strategy. It’s half knowledge—and half knowledge is just enough to get you into deep trouble.
It’s like learning how to take off in a plane but never learning how to land. At first, you’re impressed with yourself. But once you’re 10,000 feet up, you realize you have no idea what to do next.
In the world of taxes, that kind of mistake can cost you tens of thousands—sometimes hundreds of thousands—of dollars.
The Dangerous Advice Nobody Is Questioning
Here’s the truth no one on social media seems to mention:
Do NOT put income-producing assets that you’re actively depreciating into a trust if your goal is to offset your active business income.
This single mistake can wipe out powerful tax benefits that entrepreneurs rely on.
The reels and TikTok clips make trusts look like this magical one-size-fits-all solution…
But they leave out the most important part: how trust ownership changes tax treatment.
And here’s the thing: many of the people teaching this online aren’t actually tax professionals. They’re echoing whatever new “wealth hack” is trending that week.
But taxes are not a trend.
Taxes are law.
And law has rules—and consequences.
The Real-World Perspective (Not the Social Media Version)
I understand this deeper than most because I’m not just replaying internet advice. I’m an entrepreneur who has spent 13+ years building businesses and studying the tax code—not skimming it, not watching 30-second summaries, but actually digging into how it works in the real world.
Most serious entrepreneurs—people like you—earn their income through active business operations. You build, you sell, you scale. And when you start bringing in strong profits, you do what smart business owners have always done:
You invest in real estate.
Rental properties. Commercial spaces. Multi-units.
Why?
Because real estate is one of the most effective tools for preserving wealth and reducing taxable income.
And the tax code rewards you for it.
Specifically, it rewards you through depreciation—a legal deduction that reduces your taxable income while your properties continue producing cash flow.
Where Everything Goes Wrong
This is where half-knowledge becomes expensive.
You see a reel saying:
“Put EVERYTHING in a trust. That’s what wealthy people do.”
So you move your income-producing property into a trust.
You think you’re being smart.
You think you’re leveling up.
But what actually happens is the opposite.
The moment that property enters certain types of trusts, you lose the ability to apply depreciation against your active business income.
This is the part nobody mentions in the reels.
This is the part that destroys tax strategies.
This is the part that leaves entrepreneurs shocked when their tax bill explodes.
Your property still exists.
Your trust still exists.
But your write-offs?
Gone.
Why Depreciation Matters More Than You Realize
Depreciation isn’t a small bonus.
It’s one of the most powerful tax advantages available to business owners.
Used correctly, depreciation can:
- Reduce your active income taxes
- Offset revenue from your business
- Increase your cash flow
- Accelerate wealth building
- Help you scale faster
The IRS gives these benefits because real estate is considered a long-term economic contributor.
But trust?
Some trusts fundamentally change the tax relationship.
And once that happens, your ability to pair real estate losses with business income disappears.
This is why wealthy people don’t put everything into a trust.
They put the right things into the right trust, for the right reasons.
That nuance is missing from 30-second videos.
The Cost of Bad Internet Advice
I’ve seen entrepreneurs who bought properties specifically to use cost segregation and depreciation deductions. They were excited to offset hundreds of thousands in active income.
And then?
They transferred the property into a trust after watching a viral reel.
Come tax time, their CPA called them confused:
“Why is your tax bill so high? What changed?”
One decision.
One transfer.
One piece of bad advice.
That’s all it takes to ruin a perfectly good strategy that would have saved them tens of thousands of dollars.
What’s even worse is that most of these entrepreneurs don’t realize the mistake until it’s too late. And fixing a trust setup—especially after transfers—can be complicated and expensive.
Trusts Are Not the Enemy
Let me be clear:
Trusts are not bad.
Trusts are powerful, useful tools when used properly.
They’re great for:
- Estate planning
- Protecting generational wealth
- Controlling distribution of assets
- Providing long-term security
- Managing inheritance
But trusts are not meant to be used blindly.
Not everything belongs in a trust.
Especially not depreciable, income-producing assets you rely on for tax savings.
The strategy must fit the asset—not the other way around.
The Real Lesson: Know the Full Story
You wouldn’t take medical advice from a 20-second clip.
You wouldn’t take legal advice from a meme.
So why take tax strategy from reels made for entertainment?
If you’re serious about building wealth, protecting assets, and reducing your taxes, your guidance needs to come from experts who understand both the tax code and the business world—not influencers chasing views.
Before you transfer anything into a trust, sit down with a tax strategist.
Ask the right questions.
Understand the consequences.
Because one wrong move can erase years of smart planning.
Final Thought
You’ve worked too hard to lose money because someone online told you trusts are always good. Trusts are powerful—yes. But they’re not universal.
If you want to protect and grow your wealth, remember this:
Strategy beats trends.
Knowledge beats noise.
And real tax planning beats social media advice—every time.
Make Decisions That Fit Your Reality
Everyone’s circumstances are uniquely their own. A strategy that proves effective for one individual may be entirely unsuitable for another. This is why every decision—whether financial, personal, or strategic—must be made with careful consideration and aligned with your specific objectives and long-term vision. Before adopting any trend or online recommendation, take the time to evaluate what truly serves your best interests. Genuine growth occurs only when your choices reflect your unique realities and goals. Our blog is dedicated to providing accurate, reliable, and actionable insights to help you make informed, confident decisions that genuinely advance your success.
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