National Collegiate Student Loan Trust 2005-1/NCF Grantor Trust
A trust may distribute income to the individual/settlor's spouse, or hold or accumulate it for future distribution to the settlor's spouse, all subject to the required consent of an adverse party, and not be characterized as a grantor trust
[Internal Revenue Code section 672(a)], An adverse party is a person having a substantial beneficial interest in the trust who would be adversely affected by the exercise or nonexercise of the power; this might include trust beneficiaries, such as an adult child.
A "simple" trust u one dial's not a grantor trust
and provisions of which require that all trust accounting income received during the year be distributed to its beneficiaries annually, In addition, the trust is prohibited from mailing any distribution of trust assets (corpus) or charitable contributions.
tax considerations for a foreign grantor trust
If the QPRT remains a grantor trust
after the initial trust term or distributes the residence to another trust that is a grantor trust
with respect to the QPRT donor, then the income tax issues are greatly simplified.
Because most SLATs are grantor trusts
, the grantor is responsible for any income taxes payable, ensuring that trust assets will not have to be invaded.
Note that the interest and dividends taxation of grantor trusts
has not been changed.
Sale to an intentionally defective grantor trust
: With this concept, a parent owning a business sets up a grantor trust
for the benefit of the family members whom the parent wants to receive the business.
Therefore, if Peter is the insured on the policy, a transfer of the policy between the original trust and the separate grantor trust
is treated as a transfer to Peter himself.
Note that the grantor trust
option is not available for transfers made at the donor's death (the donor must obviously be alive to pay income taxes for somebody else) and may not be available for lifetime gifts in the future, as the 2012 budget proposals seek to limit this kind of planning.
A qualified revocable trust is a trust that was treated as a grantor trust
during the life of the decedent due to his power to revoke the trust (see Q 844).
For federal tax purposes the GRAT is considered a grantor trust
, meaning that the grantor pays taxes on all trust income.
A charitable lead trust is generally taxable as a grantor trust
(see Q 1450) if an upfront charitable deduction is claimed (see Q 1338).
The Tax Court cited Revenue Ruling 92-73, which holds that a traditional IRA is not a grantor trust
eligible to be considered an S corporation shareholder because, unlike a grantor trust
, its income is not currently taxed to the beneficiary.
The IRS characterizes this type of SNT as a grantor trust
. The income of a grantor trust
is taxable to the creator of the trust, in this case, the beneficiary or special needs person.