For income-tax purposes, a trust is a conduit for income paid or payable to a beneficiary. All income (including capital gains) generated by the trust’s investments will be taxed in either the trust or the hands of the beneficiary.
Depending on the trust’s terms, the trustee may be able to choose to allocate income to either. As a result, there’s opportunity for reducing tax when the beneficiary and the trust are in different tax brackets.
If there are multiple trusts, it’s possible to multiply the tax savings as each trust qualifies as a separate taxpayer.