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However, a revocable trust can provide language to create sub-trusts upon the death of a grantor (e.g. credit shelter or other irrevocable trusts) that can preserve or reduce future estate tax ...
Another factor that governs how trusts are taxed is whether the trust is a grantor or non-grantor trust. Grantor trusts are set up so that the grantor pays taxes on income. When it comes to non ...
The tax liability associated with these distributions will depend on whether the entity is a grantor trust or a non-grantor trust. With the former, the person who created the trust is considered ...
The term "grantor trust" also has a special meaning in tax law. A grantor trust is defined under the Internal Revenue Code as one in which the federal income tax consequences of the trust's investment activities are entirely the responsibility of the grantor or another individual who has unfettered power to take out all the assets. [20]
Such trusts must be irrevocable (a revocable trust will not provide asset protection because and to the extent of the settlor's power to revoke). Most of them contain a spendthrift clause preventing a trust beneficiary from alienating his or her expected interest in favor of a creditor. The spendthrift clause has three general exceptions to the ...
One key thing to decide is whether to establish a revocable or irrevocable trust. Both have … Continue reading → The post Revocable vs. Irrevocable Trusts appeared first on SmartAsset Blog.
A dynasty trust is a trust designed to avoid or minimize estate taxes being applied to family wealth with each subsequent generation. [1] By holding assets in trust and making well-defined (or even no) distributions to beneficiaries at each generation, the assets of the trust are not subject to estate, gift or generation-skipping transfer tax (GST) taxes.
A trust is an estate planning tool that you may consider using if you want to go beyond drafting a last will and testament. One key thing to decide is whether to establish a revocable or ...