IDGT

(redirected from Intentionally Defective Grantor Trust)
AcronymDefinition
IDGTI Don't Get Tired
IDGTIntentionally Defective Grantor Trust
IDGTI Don't Got Time
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References in periodicals archive ?
An intentionally defective grantor trust (IDGT) is effective for transfer tax purposes, similar to a non-grantor trust, but defective for income tax purposes, as the grantor remains responsible for paying income taxes on investments when a Form 1099 or Form K-l is issued to the trust.
Estate tax planners have long employed intentionally defective grantor trusts to freeze the value of an asset for estate tax purposes while transferring assets out of the estate free of gift tax.
The use of intentionally defective grantor trusts (IDGTs) has become increasingly popular as an estate planning technique.
The Section 7520 interest-rate used by the IRS to value charitable interests inside trusts is as low as it's been in recent memory, says DesRosiers, so it makes sense to consider putting assets that are expected to appreciate significantly, such as a business, inside an intentionally defective grantor trust or a grantor retained annuity trust.
Smith, A Sale to an Entity Trust Will Have Better Results than a Sale to an Intentionally Defective Grantor Trust or a Transfer to a GRAT, 23 Tax MgMT.
Example: Mom creates an intentionally defective grantor trust (a trust that is taxable to Mom for income tax purposes, but not taxable as part of Mom's estate) and selects the beneficiaries of this trust, typically the children or grandchildren, or both.
This method of estate planning can even be coupled with the use of a Defective Grantor Trust or often referred to as an Intentionally Defective Grantor Trust (IDGT).
As a result, a transfer to an intentionally defective grantor trust in 2010 will still be a gift subject to gift tax.
Installment sale to an Intentionally Defective Grantor Trust
We can accomplish this by using an intentionally defective grantor trust (IDGT) as the recipient of the transfer.
One such strategy is the sale of rapidly appreciating assets to an intentionally defective grantor trust (IDGT) in exchange for a promissory note bearing low interest.
An intentionally defective grantor trust (IDGT) is a complete transfer to a trust for transfer tax purposes but an incomplete, "defective" transfer for income tax purposes.