Sale to an IDIT for a Life Annuity: Confronting the Exhaustion Test and Other Challenges

Bloomberg LP

Estates, Gifts and Trusts Tax Advisory Board meeting

731 Lexington Ave., Room 29AUD

New York, NY 10022

Lewis Rice Estate Planning Department Co-chair Michael D. Mulligan will present on the sale of an Intentionally Defective Irrevocable Trust ("IDIT") for a life annuity at Bloomberg BNA's Estates, Gift, and Trust Tax Advisory Board Meeting on Thursday, September 8, 2016.

The sale to a so-called IDIT in exchange for a promissory note has become a widely-used estate planning strategy. An IDIT is a trust which is recognized to exist apart from its grantor for Federal estate and gift tax purposes, but not income tax purposes. The IDIT is created by intentionally violating provisions of the grantor trust rules contained in I.R.C. Sec. 671 et seq. in ways that do not cause inclusion in the grantor’s Federal gross estate under I.R.C. Secs. 2036-2038. The technique takes advantage of the fact that the grantor trust income tax rules are more sensitive than the rules governing inclusion in the grantor’s estate.

Click under "Resources" below to view the presentation materials.