Planning Briefs
This Type Of Trust Is A Failure
Published Tuesday, November 22, 2016 at: 7:00 AM EST
Trusts come in many shapes and sizes, but you could divide them into two broad groups—grantor trusts and non-grantor trusts. There's also a third type, however—the "intentionally defective grantor trust," or IDGT, that is designed to break tax rules for estate planning purposes.
With a grantor trust, the grantor—the person who creates it—retains considerable power over how it's administered, including the rights to amend, revoke, or terminate the trust. The grantor also maintains control over the trust assets. Typically, the grantor is a beneficiary of the trust income and principal. For instance, the grantor could be the primary beneficiary, with other family members entitled to the remainder. The grantor also can act as the trustee responsible for administering the trust.
With non-grantor trusts, however, grantors give up all of those rights. They aren't entitled to the income or the principal and, usually, payouts from the trust go to other family members. Also, the grantor cannot be the trustee of a non-grantor trust.
© 2024 Advisor Products Inc. All Rights Reserved.
More articles
- What Are The Main Items On Trump's Tax Reform Agenda?
- Set Aside The Funds You Might Need For A Rainy Day
- Why Would You Take Your RMDs Sooner?
- Tax Rewards For Charitable Trusts
- Retiring Abroad? Be Ready To Take The Bad With The Good
- Tune Into The Tax Break For NUA
- Tax Rewards For Year-End Generosity
- Easier Rules On IRA Rollover Waivers
- What Would You Do For A Bigger Salary Or More Benefits?
- Seek The Comfort Of A Pet Trust
- Locate A Tax Shelter Near A School
- 4 Year-End Strategies For Investors
- 5 Key Documents In An Estate Plan
- What's The Truth About Probate?
- Remember The Lesson Of Rebalancing