HOUSE_OVERSIGHT_022351

A sale to an IDGT is a tax-efficient way to transfer future appreciation of an asset Intentionally Defective Grantor Trust (“IDGT”) e Grantor makes arm’s length sale of assets to an irrevocable trust e Grantor receives a note for the fair market value of the asset plus interest at current AFR e Grantor pays income taxes generated by trust assets e After the note is paid, remaining trust assets pass to heirs gift tax free e Additional considerations — trust should be “pre-funded” by grantor to provide sufficient coverage for the note — having the loan guaranteed by trust beneficiaries may be beneficial — advisable to allocate GST exemption to trust in order to maximize benefit to heirs J.P Morgan i HOUSE_OVERSIGHT_022351