Get the free Planning with intentionally defective grantor trusts - National Law bb

! EW N National Law Foundation www.nlfcle.com / www.nlfonline.com / www.NLFforms.com 35Page Course Book, Audio CDs, and DVD of Live 2.1Hour December 11, 2014, Presentation STEVEN G. SIEGEL PLANNING

How to fill out planning with intentionally defective

How to fill out planning with intentionally defective:

1. Understand the concept: Before filling out planning with intentionally defective, it is essential to have a clear understanding of what it entails. Planning with intentionally defective (IDGT) is a strategy that involves creating an irrevocable trust for estate planning purposes. This trust intentionally includes a defect that causes it to be disregarded for income tax purposes but not for estate tax purposes. It allows the grantor to transfer assets out of their estate while still being able to pay income tax on assets held within the trust.
2. Identify your goals: Determine what your objectives are for utilizing planning with intentionally defective. Common goals include reducing estate tax liability, protecting assets from creditors, and transferring wealth to future generations. Clarifying your goals will help you make decisions throughout the planning process.
3. Consult with professionals: Seek guidance from experienced professionals such as estate planning attorneys and financial advisors who specialize in planning with intentionally defective. They can provide valuable insights and assist you in navigating the complexities of this strategy.
4. Gather necessary information: Collect all relevant financial and personal information required to complete the planning documents. This may include details about your assets, liabilities, beneficiaries, and any specific provisions you wish to include in the trust.
5. Draft the trust document: Work with your attorney to draft the trust document. This legal document outlines the terms and conditions of the trust, including who the beneficiaries are, how the trust assets will be managed, and any specific instructions you want to include. Discuss any tax implications and other considerations that may impact the drafting of the document.
6. Fund the trust: Transfer assets into the trust as specified in the trust document. This might involve retitling ownership of assets or reassigning beneficiary designations. It's crucial to follow the requirements outlined in the trust document and consult with professionals to ensure proper execution.

Who needs planning with intentionally defective?

1. High net worth individuals: Planning with intentionally defective is particularly relevant for individuals with a high net worth. It allows them to reduce their estate tax liability, protect their assets, and efficiently transfer wealth to future generations.
2. Business owners: Business owners can benefit from planning with intentionally defective, especially if they have significant business assets. It provides a way to separate personal and business assets, reduce tax obligations, and potentially safeguard business assets from creditors.
3. Individuals concerned about estate taxes: As estate taxes can be a significant burden on heirs, those who have a desire to minimize their estate tax liability can explore planning with intentionally defective. By leveraging this strategy, they may be able to pass on more of their assets to their chosen beneficiaries.

In conclusion, filling out planning with intentionally defective requires a clear understanding of the concept, identification of goals, consultation with professionals, gathering necessary information, drafting the trust document, and funding the trust. It is relevant for high net worth individuals, business owners, and individuals concerned about estate taxes. Seek professional advice to ensure successful implementation of this strategy.

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What is planning with intentionally defective?

Planning with intentionally defective is a tax strategy where a trust is intentionally designed to be treated as a grantor trust for income tax purposes, allowing the grantor to pay income taxes on trust income.

Who is required to file planning with intentionally defective?

The grantor of the trust is required to file planning with intentionally defective.

How to fill out planning with intentionally defective?

Planning with intentionally defective can be filled out by consulting with a tax professional or attorney who specializes in trust and estate planning.

What is the purpose of planning with intentionally defective?

The purpose of planning with intentionally defective is to shift the tax liability of trust income from the trust to the grantor, who may be in a lower tax bracket.

What information must be reported on planning with intentionally defective?

Information such as trust income, deductions, and any distributions made to beneficiaries must be reported on planning with intentionally defective.