Atlantic Trust offers a number of resources concerning estate planning strategies that involve grantor trusts
, as well as other types of trusts.
Revocable trusts are probably the most common type of trust, and they are all grantor trusts
by virtue of that retained power.
The ruling concluded that all of the trusts were grantor trusts
, (11) with all the assets treated as owned by the grantors.
Some companies, however, use an alternative method to create a grantor trust
of the corporate plan sponsor, which invests in shares of company stock.
The second explores the advantages and disadvantages of the three most frequently used types of trusts that qualify as S shareholders and why grantor trusts
are often the preferred trust type for holding S corporation stock.
Another significant advantage of a grantor trust
can be that the grantor pays the income tax on the trust's income.
When a trust qualifies as a grantor trust
for income tax purposes, all of the trust's income is taxed to the grantor (i.
A CLAT set up during the grantor's life can be established as either a grantor trust
(grantor CLAT) or a nongrantor trust (nongrantor CLAT).
Attendees will learn why a transaction treated as a sale for adequate consideration for gift and estate tax purposes is not a sale for the income tax, and the income tax consequences when the grantor trust
sale becomes an income tax realization event, either while the grantor is alive or upon the grantor's death.
Hesch, Deferred Payment Sales to Grantor Trusts
, GRATs and Net Gifts: Income and Transfer Tax Elements, 24 Tax MgMT.
The general rule is that all grantor trusts
must file a Form 1041, which contains only the trust's name, address, and tax identification number (TIN) (see Regs.
The income tax issues relating to estate planning techniques using grantor trusts
are complex because the separate tax regimes have inevitable overlap.