RENT Magazine Q2 '22

An Intentionally Defective Grantor Trust, or IDGT, is an estate planning strategy used by wealthy individuals to transfer appreciating assets to others with the least possible income tax, gift tax, and estate tax burden. The strategy employs an irrevocable trust which is carefully structured to have the following attributes: IDGT HOW TO MAXIMIZE THE TRANSFER OF ASSETS TO YOUR HEIRS WITH AN

Donor, Grantor, or Trustor: The individual or individuals setting up the trust and contributing assets. Trustee: The individual or entity responsible for managing the trust. Beneficiary: The individual or individuals who receive the income and ultimately, the trust assets. PARTIES TO A TRUST

• Income taxable to grantor: The income from the trust is taxable to the individual setting up the trust. Trust income is otherwise taxed either to the trust itself or if distributed, to the trust’s beneficiaries. • Excluded from estate: The assets inside the IDGT should not be included in the grantor’s estate. • Completed gifts: Transfers to the IDGT are considered “completed” gifts for federal estate and gift tax purposes.

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