For estate tax purposes, assets in the trust are considered gifted and not includible in tile grantor's estate
To ensure that the assets in the ILIT are not included in the grantor's estate
, the trust agreement should prohibit the trustee from using trust assets to relieve the grantor of any legal support obligations to his/her spouse.
The key however, is to make sure that the power retained would not be sufficient to include the trust property within the grantor's estate
at her death.
Note, however, in June 2007, the IRS issued proposed regulations stating that the portion of the GRAT assets included in the grantor's estate
would be as much as is necessary to produce the retained annuity in perpetuity.
The major disadvantage is that the grantor must survive the trust term for all of the trust's remaining property to be excluded from the grantor's estate
section] 453A(b); and 3) there could be income in respect of a decedent at the death of the grantor as to promissory note payments by the trust to the grantor's estate
A final drawback, which is the subject of the new rule, is that if the grantor does not survive the GRAT term, the full value of the GRAT apparently will be included in the grantor's estate
Transferring a residence to a qualified personal residence trust (QPRT) is a popular estate planning technique that can help reduce the size of the grantor's estate
However, the IRS will not apply this estate tax holding adversely to a grantor's estate
with respect to any trust created before Oct.
One of the main reasons for creating such trusts is to remove the trust property from the grantor's estate
2008-16 (28) it ruled that such a provision by itself will not cause a trust's assets to be includible in the grantor's estate
645 relating to the election for certain revocable trusts to be included for income tax purposes as part of the deceased grantor's estate
, and not as a separate trust (67 F.