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Intentionally Defective Grantor Trusts

Learn how to effectively plan with intentionally defective grantor trusts and know the tax issues related to them.

Many high-net-worth individuals have exhausted their lifetime exclusion from gift and estate taxation. So, gifting additional funds to a trust or to loved ones will then generate gift tax. Likewise, when appreciating assets are left in one's estate after exhausting the federal estate tax exclusion, assets in excess of that exemption amount will generate estate tax in accordance with the full fair market value of all of a person's assets as of that person's date of death. This course will introduce the Intentionally Defective Grantor Trust (IDGT) as a tool to help high-net-worth individuals transfer appreciating assets out of their names to leverage their estate and gift tax exemptions. The material will also explain the sale to the defective grantor trust as a method to achieve estate and gift tax savings. This information is critical for attorneys, accountants, and estate planners to assist their clients with maximizing tax savings using the sale to the intentionally defective grantor trust as a tool to leverage the estate and gift tax exemption.

64 minutes
Course Exam
Certificate of Completion
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Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Intentionally Defective Grantor Trust Definition

  • Trust Requirements
  • Grantor Trust Brief Discussion
  • What Is Defective About the Intentionally Defective Grantor Trust (IDGT)?
  • IDGT (Pronunciation - Idgit, Like Widget, or I Dig It)

Who and Why Would One Use an IDGT?

  • High-Net-Worth Individuals Who Have Exhausted or Nearly Exhausted Their (Now $12.06 Million) Estate Gift Tax Exemption
  • High-Net-Worth Individuals Who Want to Conserve Their Remaining Exemption

Case Study: Sale of LLC Units to an IDGT Mechanics

  • Grantor Establishes an Irrevocable Grantor Type Trust
  • Grantor Gifts 10% of the Value of LLC Units to the Trust
  • Grantor Executes Instrument of Sale to the Trust
  • The Trust Executes a Promissory Note at AFR Rate Back to the Grantor
  • LLC Units Must Be Appraised
  • Promissory Note Payments Must Be Tracked Preferably With an Excel Spreadsheet
  • Income Tax - Grantor Is Paying Income Tax on Any Distributions From the LLC Units
  • Income Tax - Grantor Is Not Paying Income Tax on the Interest Paid by IDGT to Grantor
  • Income Tax - No Capital Gain on Sale From Grantor to Grantor Trust

Reporting and Consequences of the Transaction

  • Recommended Filing of Gift Tax Return to Report the Sale Transaction
  • Attach to Return - Trust, Instrument of Sale, Appraisal Report
  • Income Taxable to Grantor Removes Additional Funds From Grantor's Estate Without Being Charged as a Taxable Gift
  • 10% Gift to Trust Is a Taxable Cash Gift but Can Be the Fund From Which Loan Payments May Be Made
  • The Appraised Value of the LLC Units Is Excluded From the Calculation of the Grantor's Exemption From Gift and Estate Tax; Likewise All Appreciation Is Excluded
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Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

Applications have not yet been submitted for Delaware, Idaho, Kentucky, Maine, Oklahoma, South Carolina, and Wyoming CLE for this course. However, if you are interested in obtaining CLE for any of the listed states or have any additional credit questions please email us at [email protected] or call us at 866-352-9540.

This course was last revised on March 31, 2022.

Call 1-866-352-9540 for further credit information.

  • AK CLE 1.0
     
  • Alaska attorneys may receive 1.0 hours of continuing legal education for completing this program. Please contact the Alaska Bar Association or go to www.alaskabar.org for details regarding reciprocity with other states.
     
  • AL CLE 1.1
     
  • This course or a portion thereof has been approved by the Alabama State Mandatory Continuing Legal Education Commission for a maximum of 1.1 hours credit.
     
  • AR CLE 1.0
     
  • This course has been approved for 1.0 hours of CLE by the Arkansas CLE Board.
     
  • Arizona CLE 1.0
     
  • The Arizona State Bar does not pre-approve or pre-certify MCLE programs. However, records of this program and attendance will be maintained by Lorman Education Services for auditing purposes. This activity may qualify for up to 1.0 hours toward your annual CLE requirement for the State Bar of Arizona.
     
  • CA MCLE 1.0
     
  • Lorman Business Center, LLC. is a State Bar of California approved MCLE sponsor and this course qualifies for 1.0 CLE hours of participatory credit.
     
  • CT CLE 1.0
     
  • Neither the Connecticut Judicial Branch nor the Commission on Minimum Continuing Legal Education approve or accredit CLE providers or activities. This course has been approved for CLE credit in jurisdictions aside from CT and therefore it automatically meets the content and delivery requirements in Connecticut. Credit is based on a 60 minute credit hour and shall be awarded as follows: 1.0 CLE credit(s).
     
  • GA CLE 1.0
     
  • This program has been approved by the Georgia Commission on Continuing Lawyer Competency for 1.0 CLE hours.
     
  • HI CLE 1.0
     
  • This program was approved by the Hawaii State Board of Continuing Legal Education for 1.0 CLE credit hours.
     
  • IL CLE 1.0
     
  • This course was approved for a total of 1.0 hours of MCLE Credit by the Illinois MCLE Board.
     
  • IN CLE 1.1
     
  • This program has been approved by the Indiana Commission on Continuing Legal Education. Participating attorneys are eligible to receive up to 1.1 hours of Distance Education credit.
     
  • MO CLE 1.3
     
  • This course qualifies for self-study CLE credit in Missouri.
     
  • MS CLE 1.1
     
  • This program has been approved by the Mississippi Commission on Continuing Legal Education for a maximum of 1.1 credit hours.
     
  • NC CLE 1.0
     
  • This program has been approved by the North Carolina State Bar Board of Continuing Legal Education for 1.0 CLE hours.
     
  • ND CLE 1.0
     
  • North Dakota CLE policy does not allow for pre-approval of any self-study courses. This course may qualify for up to 1.0 hours of CLE credit.
     
  • NH MCLE 1.1
     
  • NH MCLE does not approve or accredit CLE activities for the NH Minimum CLE requirement. Lorman Education Services believes this Ondemand course meets the requirement of NH Supreme Court Rule 53 and may qualify for CLE credit(s). Program Length: 64 Minutes.
     
  • NJ CLE 1.3
     
  • This program has been approved by the Board on Continuing Legal Education of the Supreme Court of New Jersey for 1.3 hours of total CLE credit.
     
  • NM CLE 1.0
     
  • This program has been approved by the New Mexico Minimum Continuing Legal Education Board for 1.0 hours of credit.
     
  • NV CLE 1.0
     
  • This program has been approved by the Nevada Board of Continuing Legal Education for 1.0 CLE hours.
     
  • NY CLE 1.0 including Areas of Professional Practice 1
     
  • This course has been approved in accordance with the requirements of the New York Continuing Legal Education Board for up to a maximum of 1.0 credit hours in the area(s) of Areas of Professional Practice for 1.00 hour. Each hour may be counted only as satisfying one category of credit. Duplicate credit for the same hour of instruction is not permitted. This course qualifies for both established and newly admitted attorneys. Lorman Business Center, LLC. has a financial hardship guideline. Please contact customer service at 1.866.352.9539 for instructions on how to apply.
     
  • OH CLE 1.0
     
  • This course has been approved by the Ohio Supreme Court Commission on Continuing Legal Education for 1.0 CLE credit hours. Please note: No more than twelve (12) hours of self-study CLE credit for any biennial reporting period may be earned by an Attorney or Judge under Regulation 409.2. To fulfill CLE requirements for self-study, web-based programs, you must complete 100% of the polling questions during the program. Your hours will be filed electronically within thirty (30) business days by Lorman Education Services provided you fulfilled 100% attendance and polling questions answered.
     
  • PA CLE 1.0
     
  • This Distance Learning program has been approved by the Pennsylvania Continuing Legal Education Board for 1.0 hours of substantive law, practice and procedure CLE credit.
     
  • TN CLE 1.07
     
  • This program has been approved as a distance learning format by the Tennessee Commission on Continuing Legal Education for a maximum of 1.07 hours of credit.
     
  • VA CLE 1.0
     
  • This program has been approved by the Virginia Mandatory Continuing Legal Education Board for 1.0 CLE credit hours.
     
  • VT CLE 1.0
     
  • This self-study program has been approved by the Mandatory Continuing Legal Education Board of Vermont for 1.0 hour(s) of CLE credit. Please note: Attorneys may only claim 12 credits per compliance period in this format. This course is considered "Non-Moderated Programming without Interactivity".
     
  • WA CLE 1.0
     
  • This program has been approved by the Washington State Board of Continuing Legal Education for 1.0 hours of A/V credit under the Law & Legal Procedure category.
     
  • WI CLE 1.0
     
  • This program qualifies for 1.0 hour(s) of ondemand CLE through the WI Board of Bar Examiners.
     
  • WV MCLE 1.3
     
  • This program has been approved by the West Virginia State Bar MCLE Commission for 1.3 MCLE hours.
     
The CLE Code is ONLY a requirement when applying for CLE Credit in New York. Other states do not need to supply the CLE Code to apply for CLE credit.

To earn each credit Lorman offers through the OnDemand learning platform, you need to watch 100% of the program. Also, for certain credits you will need to fulfill additional requirements which will be displayed on the "credits" tab when viewing the course.

Virginia MCLE requirements do not allow approval for programs that do not include an audio or audiovisual component.

This program was previously offered as a live webinar. Virginia MCLE requirements do not allow approval for attendance at duplicate programs.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

MP3 Download

  • AK CLE 1.0
     
  • Arizona CLE 1.0
     
  • CA MCLE 1.0
     
  • CT CLE 1.0
     
  • HI CLE 1.0
     
  • MO CLE 1.3
     
  • NJ CLE 1.3
     
  • NM CLE 1.0
     
  • NY CLE 1.0 including Areas of Professional Practice 1
     
  • VT CLE 1.0
     
  • WA CLE 1.0
     
  • WV MCLE 1.3
     
The CLE Code is ONLY a requirement when applying for CLE Credit in California (for participatory credit), Kansas, New Jersey or New York. Other states do not need to supply the CLE Code to apply for CLE credit.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Charles Bryan Baron, Esq.

Charles Bryan Baron, Esq.

McLaughlin & Stern, LLP

  • Partner, McLaughlin & Stern LLP, New York, NY
  • Trusts, estates, and taxation practice
  • Named expert in the law of New York Private Trusts, 2004
  • Author of “Self Dealing Trustees and the Exoneration Clause: Can Trustees Ever Profit from Transactions with Trust Property,” 72 St. John’s Law Review 43 (1998) and “The International Legal Status of Jerusalem,” 8 Touro International Law Review 1 (1998)
  • Translator-interpreter at the John Demjanjuk war crimes trial in Israel, 1987
  • Member of the New York Bar, United States District Court for the Southern District of New York, United States District Court for the Eastern District of New York, United States Tax Court, and the United States Supreme Court
  • B.A. degree in international relations, magna cum laude, University of Pennsylvania; LL.B. degree, Bar Ilan University Faculty of Law; LL.M. degree, summa cum laude, Touro University Law Center
  • Can be contacted at [email protected]
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Product ID: 409552
Published 2022
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