They now seem to have become “fair game” for some people, including some professional advisers, who say that they are no longer of any use.
That flawed logic seems to be based on two points.
One, tax rates are flatter than they used to be so there is no longer a differential between the top personal tax rate and the trust tax rate. Granted, that is the case. But so what! A distribution to a beneficiary of a Trust is still going to be taxed at their personal tax rate.
And two, the Trust might be a “sham”. Of course it might be. Any Trust could be a sham if it is not administered correctly. But is that a good enough reason not to use a Trust if there are better reasons why it might be useful?
Of course not.
The key then, is to administer it correctly.