Leveraging the $5 million exemption – An installment sale to a defective trust is a powerful strategy
Abstract: With the currently high gift and estate tax exemptions set to go down to $1 million after 2012, now is a good time to explore strategies for making the most of the present opportunity. One strategy to consider is a combination of two effective estate planning vehicles: the installment sale and the intentionally defective grantor trust (IDGT). An installment sale to an IDGT has the potential to transfer substantial value at little or no tax cost. This article explains how it works and how to design one.