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These include Grantor Retained Annuity Trusts, in which an individual transfers assets to a trust and retains an annuity from the trust for a term of years; and Intentionally Defective Grantor Trusts, in which the grantor is treated as the owner for income tax purposes, but not for estate, gift or generation-skipping transfer tax purposes.
Tax and estate planning advice was provided by Ken Weissenberg of EianerAmper and Glenn Kurlander of Morgan Stanley, who delved into umbrella partnership REITs, intentionally defective grantor trust and parking transactions --an olden-overlooked deal structure totally unrelated to vehicle storage, which Weissenberg compared to "diamonds on the beach.
The intentionally defective grantor trust, another popular estate planning vehicle that, according to Cohen, could lose some luster if the policies governing it are changed.
The intentionally defective grantor trust (IDGT) is modeled as an irrevocable trust whose assets are treated as the grantor's for income tax purposes, but not for gift or estate tax purposes.
Example: Mom creates an intentionally defective grantor trust (a trust that is taxable to Mom for income tax purposes, but not taxable as part of Mom's estate) and selects the beneficiaries of this trust, typically the children or grandchildren, or both.
An intentionally defective grantor trust (IDGT) is a complete transfer to a trust for transfer tax purposes but an incomplete, or "defective," transfer for income tax purposes.
An intentionally defective grantor trust (IDGT) is a complete transfer to a trust for transfer tax purposes but an incomplete, "defective" transfer for income tax purposes.
Warning: The intentionally defective grantor trust is a relatively new concept that is not specifically endorsed by statute, so there is some uncertainty surrounding it.