2007-13, the IRS determined that the transfer of life insurance contracts between grantor trusts
owned by the same grantor is not a transfer for valuable consideration under Sec.
1) This article will primarily focus on grantor trusts
rather than nongrantor trusts.
Three commonly used types of ongoing trusts qualify as S corporation shareholders: grantor trusts
, qualified subchapter S trusts (QSSTs) and electing small business trusts (ESBTs).
The guidance, given in Revenue Ruling 2007-13, deals with a grantor insured by a life insurance policy who owns 2 grantor trusts
Under the final regulations, in addition to all other grantor trusts
, the trustee of an electing trust or a QRT for which a Sec.
8 million shares of Mobil common stock in response to a required change in the method of accounting for deferred compensation plans and grantor trusts
Note that revocable trusts will be grantor trusts
even if they are foreign trusts under IRC section 7701(a)(30) and (31), notwithstanding that it is generally rather difficult to qualify foreign trusts for grantor trust
treatment [see IRC section 672(f)],
163-5T(d)(l) is limited solely to passthrough certificates issued by grantor trusts
This article will discuss, in general terms, various wealth transfer opportunities, such as intra-family loans, outright gifts, sales to intentionally defective grantor trusts
(IDGTs), grantor retained annuity trusts (GRATs) and charitable lead annuity trusts (CLATs), that may be appropriate during this turbulent economic environment.
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.
These are commonly known as grantor trusts
and are treated for tax purposes as not separate and apart from the grantor.
In this ruling, irrevocable grantor trusts
were established to pay annuities for seven years or until the death of the grantors, if earlier.