Possible changes to the inheritance and gift tax law | Sheppard Mullin Richter & Hampton LLP
Last week, the House Ways and Means Committee released a draft tax law amendment to be included in a reconciliation bill. While it is uncertain whether any of these proposals will be adopted – and if so in what form – several of them would radically alter current estate planning techniques and may require immediate attention.
Amendments to the Grantor’s Trust. The most ambitious proposal is to change the tax treatment of “concessionaires”. A grantor trust is a trust in which the grantor remains liable for tax on all income of the trust, even though it has no ownership or control over the assets of the trust, so the assets of the trust trust is not included in the grantor’s estate. Common examples of a grantor trust used in estate planning are a Grantor Retained Annuity Trust (FREE), Qualified Personal Residence Trust (QPRT), Spousal Life Access Trust (SLAT), many trusts. life insurance (ILIT), intentionally defective grantor trusts. used for donating and selling assets to children or other beneficiaries (IDGT) and many other trusts intentionally structured for the settlor to donate in full while remaining subject to income tax on the trust income.
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