"Thank you so much for helping me get through a “terrible” situation! I’ve never dealt with the IRS before and found it quite intimidating! Thank you. "
- Ray O. | TestimonialsA “Grantor Trust” is a trust that runs “afoul” of the rules contained in Sections 671 through 679 of the Internal Revenue Code (the “Grantor Trust Rules”). Traditionally, running afoul of Grantor Trust Rules was viewed negatively in that the Grantor (the creator of the trust) of the trust was, for income tax purposes, the owner of the trust assets, and therefore personally responsible for all items of income (ordinary income and capital gains) attributable to the assets held in the trust. This personal responsibility existed whether the income and/or principal was distributed to the Grantor or not.Even though the Grantor is treated as the owner of a Grantor Trust for income tax purposes, he or she is not treated as the owner for estate tax purposes. The estate tax inclusion rules are applied separately to make the latter determination and applied using different rules than the Grantor Trust rules. An Intentionally Defective Grantor Trust (“IDGT”) is a term used for a trust that is purposely drafted to invoke the Grantor Trust Rules.An IDGT offers a good deal of flexibility in addition to estate planning and asset protection benefits. Although irrevocable, an IDGT allows you to continue to manage your property (through a business entity for example) and gives you the ability to access trust property in a number of fashions, depending on your goals.
