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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]
A trust is a legal entity that holds money and assets for future distribution or management. For example, you might create a trust for your children's college education, putting money into it ...
Residence trusts in the United States are used to transfer a grantor's residence out of the grantor's estate at a low gift tax value. Once the trust is funded with the grantor's residence, the residence and any future appreciation of the residence are excluded from the grantor's estate, if the grantor survives the term of the trust, as explained below.
The post The Tax Consequences of Transferring Stock to a Trust appeared first on SmartReads by SmartAsset. There are significant tax implications associated with this strategic decision that you ...
A grantor transfers property into an irrevocable trust in exchange for the right to receive fixed payments at least annually, based on original fair market value of the property transferred. [2] At the end of a specified time, any remaining value in the trust is passed on to a beneficiary of the trust as a gift. Beneficiaries are generally ...
Hybrid trust: Combines elements of both fixed and discretionary trusts. In a hybrid trust, the trustee must pay a certain amount of the trust property to each beneficiary fixed by the settlor. But the trustee has discretion as to how any remaining trust property, once these fixed amounts have been paid out, is to be paid to the beneficiaries.