Author: radler

7B.3 TRUSTEE LIABILITIES Trustee liability is another factor to be considered by the grantor when selecting a trustee. For example, an individual trustee may be exposed to personal liability for a breach of his or her duty that is owed to the trust beneficiaries. An individual trustee may, however, be judgment proof (or close to […]

This chapter examines factors that a grantor should consider in the selecting a trustee for the ILIT, including trustee attributes, duties and liabilities.1 The chapter also contains a discussion of the non-insured surviving spouse serving as a trustee of the ILIT. 7A.1 SELECTION OF TRUSTEE In selecting a trustee to administer the ILIT and its […]

6B.3 INCOME TAX ISSUES AND THE BENEFICIARY-TRUSTEE When a trust is not a grantor trust,1 the income tax consequences of a beneficiary-trustee’s ability to make distributions2 to him or herself from a trust, even if limited by an ascertainable standard, are as follows. 6B.3(a) Beneficiary-Trustee’s Sole Power To Make Distributions Generally, if a beneficiary-trustee has […]

Who serves as a trustee of the ILIT can have profound income and transfer tax consequences for the grantor and for the trustee, especially if the trustee is a beneficiary of the ILIT. This Chapter discusses what the income, estate, and gift tax consequences are of a beneficiary who serves as a trustee of an […]

5C.25 MODIFICATIONS TO GST GRANDFATHERED TRUSTS Treas. Reg. §26.2601-1(b)(4) provides rules for determining when a modification, judicial construction, settlement agreement, or trustee action with respect to a GST grandfathered trust will not cause the trust to lose its GST tax exempt status. Safe harbors are provided for (1) certain distributions of trust principal from a […]

5B.10 TRANSFEROR DEFINED Generally, a transferor (for GST tax purposes) means the decedent in the case of property includable in the decedent’s gross estate under Chapter 11 of the Internal Revenue Code, and the donor in the case of property subject to gift tax (without regard to exemptions, exclusions, deductions, and credits) under Chapter 12 […]

This chapter1 discusses selected key generation-skipping transfer (GST) tax issues concerning life insurance. The GST tax is one of the most complicated provisions of the federal transfer tax system, and probably one of the least understood by practitioners who do not practice in the GST tax area on a frequent basis. The application of the […]

4B.5 ESTATE TAX CONSEQUENCES OF AN UNLAPSED CRUMMEY WITHDRAWAL RIGHT  A Crummey withdrawal right is a general power of appointment. IRC sections 2514 and 2041. Its termination during the powerholder’s lifetime may not be a taxable release if the right of withdrawal (or rate of lapse under a hanging right of withdrawal) is limited under […]

One of the primary reasons for creating an ILIT is to keep life insurance proceeds out of the insured’s gross estate for federal estate tax purposes. See, section 1.1, above. This chapter discusses the many ways an ILIT can fail to accomplish that purpose, and how to avoid those types of issues. The chapter also […]

3B.8 GIFT TAX ANNUAL EXCLUSION FOR IRC SECTION 2503(C) MINOR’S TRUST A gift to a trust for the sole benefit of the individual who is under 21 on the date of the gift, is considered a gift of a present interest in the property for purposes of IRC section 2503(b), provided: The gift/property and the […]