should only appoint someone as attorney that they trust to deal with their affairs honestly."
Further, the essence of an effective delivery is the surrender of control by the grantor
. Where the deed is to become effective upon the performance of a condition by the grantee, then the grantor
has no control over the situation.
Simultaneously, because of the intentionally defective trust provisions, for income tax purposes it will be treated as a grantor
trust and ignored as a separate taxable entity.
If the grantor
is going to name specific beneficiaries during his lifetime, he should ascertain that such beneficiary(ies) is able to own a firearm.
Specifically, opening a new account allows the financial firm to report taxes under the grantor
's SSN for the period prior to death, and under the separate EIN for the period after death.
In this example, if the trust is a grantor
trust (an irrevocable trust that includes certain powers under subchapter J of the Code), the $500,000 of income is taxed on the grantor
's personal tax return for federal and state purposes.
Finally, an Intentionally Defective Grantor
Trust ("IDGT") exploits the differences in estate and income tax through a grantor
's sale of property to the trust in exchange for payments on a note.
Perhaps they are the successor trustee and the trust is dynastic in nature intended to benefit the beneficiary (and perhaps beyond).Or perhaps it is a small family, and the grantor
wants assets controled by family members who are also beneficiaries.
If the owner of the trust is someone other than the grantor
, that owner will be liable for taxes in any transaction where she sells property to the trust in a manner that would trigger capital gains taxation if she did not own the trust.
Another way to make an ILIT more flexible is to provide someone other than the grantor
with a lifetime LPOA to distribute trust income or principal (e.g., the policy's cash value or the policy itself) to a class of appointees.
When the GRAT term is reached the business passes to the grantor
's children or to a trust for their benefit of the children.
However, there are two exceptions to this rule: (1) with respect to any taxable year ending before the date that is 2 years after the decedent's death, trusts owned by the decedent (under the grantor
trust rules) and to which the residue of the decedent's estate will pass under his will need not file estimated tax (if no will is admitted to probate, this rule will apply to a trust which is primarily responsible for paying taxes, debts and administration expenses); and (2) charitable trusts (as defined in IRC Section 511) and private foundations are not required to file estimated tax.