•  Also known as a Intentionally Defective Grantor Trust (IDGT)

  • Transfers are subject to transfer tax and the annual exclusion is available

  • Trust is irrevocable but income is taxed to the grantor hence ‘defective’

  • Assets not included in grantor’s estate

  • Trusts assets are included in grantor’s estate if:

  • The grantor retains a reversionary interest of 5 percent or more of the trust property

  • The grantor retains control over the enjoyment of the trust property

  • The grantor retains certain administrative powers over the trust property

  • Can be used in conjunction with an ILIT under IRC § 667