The belief is a “grantor trust” as to the beneficiary as a substitute of the grantor. The trust, due to this fact, does not exist for earnings tax purposes as to the beneficiary, which allows the beneficiary to “sell” assets to the BDT . The distinction between an IDGT and a BDT is that the beneficiary, because she or he didn’t make a gift to the trust, may be a beneficiary of the belief with out antagonistic death tax consequences. If a shopper desires to use a belief for planning, funding an inter vivos trusts could additionally be important as a result of trusts don’t qualify as “qualified transferees”. That is, a belief funded at demise with a business curiosity is not a “qualified transferee”. If testamentary trusts are employed, then the non-tax advantages of the trust must be weighed towards triggering an inheritance tax on the value of the enterprise interests transferred at death.

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