Tag Archives: Trust Fundamentals

When is a Non-Grantor Trust Preferable?

Grantor trusts became one of the most commonly used tools for estate tax planning beginning with the enactment of the Tax Reform Act of 1986 (P.L. 99–514), which substantially reduced the increases in federal income tax rates. Two major perceived benefits have been (1) to allow the trust to grow free of income taxes because the income of the trust is attributed to the grantor1 and (2) the ability of the trust’s grantor to sell appreciated assets to the trust without a gain or other income recognition in exchange for a note. This note typically has interest at the applicable federal rate, and this interest is not taxed as income. Instead, the position of the Treasury and the Internal Revenue Service (IRS) is that the grantor will continue to be treated as the owner of the trust assets for federal income tax purposes.2

Grantor trusts also offer other benefits. For instance, the grantor, or the grantor’s spouse under Section 1041, can buy low basis assets from a grantor trust before death and achieve an automatic (commonly called a “tax-free”) change in basis upon death. Moreover, a grantor trust whose grantor is a U.S. individual taxpayer is automatically a qualified S corporation shareholder.3


Nevada Asset Protection Trust- Just Prudent Planning

Geri Tomich, Esq., discusses Nevada Asset Protection Trust.


Nevada is one of the few states, that has a statute that allows the creation of a self-settled spendthrift trust to protect one’s assets from creditors. As a practitioner in this state, I may be biased in saying that Nevada law is superior in the creditor protection arena but many will agree that this bias is not baseless.

In October of 1999, the Nevada State Legislature revised the “Spendthrift Trust Act of Nevada” allowing a person to create a spendthrift trust for the protection of his own assets – hence the term self-settled spendthrift trust. If created and managed correctly, a person can create a trust to which he transfers his personal assets and avail of creditor protection, even when the person is also a beneficiary of the trust. Nevada law also does not prohibit the person from serving as a trustee of the trust but it is very important that the power to make distributions to the person is at the discretion of someone else. This is where the use of professional trustees is highly beneficial.

Read the full article on Nevada Asset Protection Trust here.

Grantor Trusts and Income Tax Reporting Requirements: A Primer

A trust is a “grantor trust” for income purposes to the extent that under the rules articulated in subpart E (section 671 through 679) of part 1 of subchapter J and chapter 1 of the Internal Revenue Code of 1986, as amended, the trust’s income, deductions, and credits against tax are attributed to its grantor or its beneficiary. A trust may be a grantor trust in its entirety or only in part, and may be a grantor trust with respect to one or more taxpayers.

Tangible Personal Property

Every estate includes tangible personal property: cash, clothes, jewelry, furnishings, vehicles, pets, artwork, gold, alcohol, boats, electronics, cars, wine, guns, etc. Challenges you may face are as varied as the assets involved. This practical webinar will discuss critical planning, drafting, and tax considerations of planning for tangibles.

Determining How and When to Gift Illiquid Assets

○ Most gifts to charities are in the form of cash or marketable securities.

Gifts of illiquid assets are a creative way to make large contributions with amazing benefits for the charity and donor.

Gifting illiquid assets can be an effective way to fulfill a charitable goal.

May allow the donor to use an asset that perhaps was once illiquid, was a non-producing asset or perhaps is expensive to maintain.

They are considered a complex asset and will take careful planning to execute.

Some examples of illiquid assets:

         ■ Real Estate

         ■ Artwork or other Collectibles

         ■ Private Company Stock

         ■ Private Entities (LLC, LP)

         ■ Life Insurance

Irrevocable Life Insurance Trust (ILIT) Fundamentals & Benefits: Janet Tempel, Sr. Trust Officer

This episode focuses on the fundamentals of Irrevocable Life Insurance Trusts (ILITs). We spoke with trust expert, Janet Tempel, Senior Trust Officer at Peak Trust Company to cover:

  • What is an Irrevocable Life Insurance Trust?
  • What are the benefits of using an ILIT?
  • How should the attorney/trustee work together to set expectations with clients about the process of setting up an ILIT?
  • How do tax returns for an ILIT work?
  • And much more…

If you have further questions about irrevocable life insurance trusts after listening to the podcast or want to learn more about Peak Trust Company, contact us today.