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Grantor trust |
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Grantor trust A mechanism of issuing MBS wherein the mortgages' collateral is deposited with a trustee under a custodial or trust agreement. Grantor trust. An exchange traded fund (ETF) may be structured as a grantor trust. Such a trust holds a fixed portfolio of assets and issues shares based on the value of those assets. Shares in grantor trust ETFs are traded on the stock market throughout the day as other ETFs are. But unlike ETFs that are structured as investment company funds or unit investment trusts (UITs), grantor trusts aren't securities, don't track an index, and aren't rebalanced from time to time. Grantor trusts may own commodities -- such as gold or a currency -- or a portfolio of securities. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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This is referred to as a defective trust, and causes the trust to be treated as a grantor trust. This method of estate planning can even be coupled with the use of a Defective Grantor Trust or often referred to as an Intentionally Defective Grantor Trust (IDGT). Therefore, a "proper" defective grantor trust eliminates this gift tax on those income tax payments because the grantor is obligated to pay that income tax (without the right to be reimbursed). |
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