The Internal Revenue Code is a long, complicated law with many subtitles, chapters, parts and sections. Although we are all aware of income taxes, few care that they are depicted by Subtitle A of the Code. Many are equally aware of estate taxes and gift taxes, and again few care that they are depicted by Subtitle B of the Code, Chapters 11 and 12 respectively. Even fewer care about Subchapter J of Chapter 1 of Subtitle A of the Code, which depicts how the income of trusts is taxed. Savvy estate planning attorneys are the few individuals who study these subtitles, chapter and subchapters of the Code and use the lack of coordination between the rules for income taxes, estate taxes and gift taxes to the benefit of their clients.
Why a ‘Grantor Trust’ is a good addition to every estate plan
Here's Why You Shouldn't Write Your Own Living Trust
Write the first and last name of the individual, known as a Grantor, who is making this Trust. In consideration of the mutual covenants and promises set forth in this Agreement, the Grantor and the Trustee agree to the following:. The purpose of this Agreement is to create a Trust that will receive and manage the assets for the benefit of the Grantor during the Grantor's lifetime, and to then further manage and distribute the assets of the Trust upon the death of the Grantor. Grantor, or any other person, with the consent of the Trustee, may at any time or from time to time deed, grant, devise, bequest, gift, or otherwise cause additional property to be transferred to and administered as a part of the trust estate created hereunder. Any such transfer may be evidenced by the receipt of the Trustee, and each such receipt shall be conclusive evidence of the consent of said Trustee to the transfer thereof. The Trustee shall manage and distribute the Trust assets for the benefit of the Grantor and the Grantor's successor s in interest in accordance with the terms of this Agreement.
How to Close a Revocable Trust After Death
In most cases, an irrevocable trust is not considered a grantor trust. Generally, a grantor of an irrevocable trust gives up control over trust assets and no longer owns these assets. Instead, the trust owns the assets. However, there are some exceptions to this general rule.
In certain situations, creating a grantor trust can be an invaluable aid for estate planning purposes. Find out how to create a grantor trust and whether such a trust is the best tool for your estate planning needs. Revocable and irrevocable trusts are common estate planning vehicles.