Self-Settled Trusts Should Not Be Included in a Decedent’s Taxable Estate – Analysis
- Assets gifted by Decedent (in trust or otherwise) but Decedent retained for life:
- “The right to the income from”; or “The possession or enjoyment of” such assets
- If so, the assets are included in Decedent’s Gross Estate
- In a self-settled trust, the client/settlor does not retain the right to income (or principal)
- Does the client/settlor retain “possession or enjoyment of” the trust assets for life?
- If the Settlor of a trust retains the right to alter, amend, revoke or terminate the trust at death, the assets will be includible in the Settlor’s Gross Estate.
- BUT, in the properly designed self-settled trust, the Settlor does not retain any such powers.