Unlocking the Power of ChatGPT and AI in Testing - A Real-World Look, present...
Fiscal green book fidgets with IDGT s
1. Fiscal Green Book Fidgets with IDGTs
The Obama administration takes aim at Grantor Retained Annuity Trusts (GRATs) and
Intentionally Defective Grantor Trusts (IDGTs).
Place logo
or logotype
here,
otherwise
delete this.
VIDEO
LAW OFFICE OF DAVID PARKER BLOG
PLLC
2. Along with possible changes to the laws affecting estate and gift
tax rates and exemptions, there are other possible upheavals in
view by the end of this year or proposed for next year. 2012
may be the last truly advantageous year for certain trusts like
Grantor Retained Annuity Trusts (GRATs) and a somewhat
lesser known vehicle, the Intentionally Defective Grantor Trust
(IDGT), as a recent article in Forbes details.
Place logo
or logotype
here,
otherwise
delete this.
VIDEO
LAW OFFICE OF DAVID PARKER BLOG
PLLC www.parkertrustlaw.com
3. An IDGT is an estate-planning tool involving depreciated assets
that is of particular value in a recessed or recovering economy.
In essence, the trust is set up by a Grantor (i.e., the Trustmaker)
who then sells assets to the trust in exchange for a note at a very
low interest rate. This is not uncommon with many trusts, but
since it’s defective it also places the interest rate burden back on
the grantor. Result: The Grantor gets an initial market value on
their sale, which is likely to be low, and then continues to pay
for those assets.
Place logo
or logotype
here,
otherwise
delete this.
VIDEO
LAW OFFICE OF DAVID PARKER BLOG
PLLC www.parkertrustlaw.com
4. Here’s what the Grantor is betting: The asset sold is legitimately
“undervalued” at present, but is expected to greatly increase in
value if the economy returns to full swing. As a
consequence, the undervalued asset appreciates at a greater rate
than the very low interest rate and thereby locks that value into
the trust for beneficiaries, and keeps that added value from
ballooning the size of an estate instead. Moreover, since the
assets were sold in the first place, the use of such a trust won’t
waste the valuable lifetime gift tax exemption.
Place logo
or logotype
here,
otherwise
delete this.
VIDEO
LAW OFFICE OF DAVID PARKER BLOG
PLLC www.parkertrustlaw.com
5. Not everyone likes the strategy, though, and predictably the
revenue-starved federal government is among the detractors.
The Obama administration is proposing rules changes for the
2013 fiscal year that would essentially eliminate the IDGT as a
tool of NY estate planning and sharply curtail use of the GRAT.
As always, there’s no telling what will finally emerge from
Congress, but wise consideration of New York asset protection
would call for making plans now in view of possible
consequences soon, and perhaps locking in the current
rules, which are almost sure to be more beneficial than what the
future will hold.
Place logo
or logotype
here,
otherwise
delete this.
VIDEO
LAW OFFICE OF DAVID PARKER BLOG
PLLC www.parkertrustlaw.com
6. Law Office of David Parker
Estate Planning and Elder Law
www.parkertrustlaw.com