It’s intentionally defective? How an IDGT can benefit your estate plan
Abstract: Despite its somewhat odd sounding name, an intentionally defective grantor trust (IDGT) can help one realize significant gift and estate tax savings. Combining the estate tax benefits of an irrevocable trust with the income tax advantages of a grantor trust, an IDGT removes assets from one’s estate, but it’s treated as a grantor trust for income tax purposes. This can substantially increase the amount of wealth that beneficiaries receive without triggering additional gift or estate taxes. And, IDGTs can be an ideal vehicle for selling assets that have appreciated in value and are expected to continue appreciating.