A “Reality of Sale” Analysis of Installment Sales to Grantor Trusts: Properly Structured, the Best Transfer Tax Strategy

August 2015

The sale to an Intentionally Defective Irrevocable Trust (IDIT) in exchange for the IDIT's promissory note has become an established estate planning technique. If the seller's life expectancy is shortened by illness, an annuity based upon the seller's life or a Self-Cancelling Installment Note (SCIN) may be substituted for the promissory note. Unlike a standard promissory note, payments under the annuity or SCIN terminate at the seller's death, leaving only payments which the seller received during his or her lifetime to be included in the seller's estate.

This presentation reviews the standard sale transaction, as well as the two variations. Then, we will examine authorities (including what Jerry Hesch, the Director of this Institute, refers to as "reality of sale" cases) which indicate that a properly structured sale to an IDIT should be a successful transfer tax planning strategy.

Four recent cases have generated a great deal of interest among estate planning commentators. One case is a final decision by the Tax Court, Estate of Trombetta v. Commissioner. The others are the companion cases of Estate of Marian Woelbing v. Commissioner and Estate of Donald Woelbing v. Commissioner, and the case of Estate of Davidson v. Commissioner. Chief Counsel Advise (CCA) 201330033 was issued in connection with the Davidson case. This presentation studies these cases and their impact on the sale to an IDIT strategy.

Resources

Firm Highlights
Diversity & Inclusion

Law Firm ILN-telligence Podcast Hosts Ronald A. Norwood to Discuss Mentorship, Diversity & Inclusion in the Legal Industry, and the Importance of Equity for All

More
Client Alert

Missouri Supreme Court Holds that Public Governmental Bodies May Not Charge for Attorney Review Time

More
News

Jeannine Moentmann Becomes President of St. Louis Paralegal Association for 2021-2022

More
News

Claims Filed for Compensation in North Carolina Ecusta Trail Rail-to-Trail Case

More
Client Alert

FTC Adds Teeth to the ‘Made in USA’ Rule

More
Client Alert

CROWN Act Legislation on the Verge of Passage in St. Louis City & County

More
Client Alert

Supreme Court Hands Down Unanimous Decision Limiting FTC’s Ability to Seek Monetary Relief

More
News

Michael D. Mulligan, Mysun Charitable Foundation Recognized at Greensfelder Park Ribbon Cutting Ceremony

More
News

A Lawyer’s Guide to the Galaxy Podcast Named Among Best Copyright Law Podcasts for 2021 by Welp Magazine

More
Diversity & Inclusion

Lewis Rice Launches “Next Level” Diversity and Inclusion Programs

More
Client Alert

DOL Publishes Cybersecurity Guidance for Benefits Plans

More
Client Alert

Supreme Court Limits Ability to Compel Access to Private Property Without Compensation

More
Client Alert

Missouri Supreme Court Reverses Overtime Wages Judgment Resulting from Employer-Mandated Screenings Under the Portal-to-Portal Act

More
News

Lewis Rice Welcomes 2021 Summer Associates

More
Client Alert

EEOC Issues Updated Guidance on COVID Vaccination Policies

More
Client Alert

Colorado Joins the Bandwagon, Enacts Comprehensive Privacy Law

More
Client Alert

First-Issued Interim Final Rule Gives Guidance on No Surprises Act

More
Client Alert

The Changing Workplace Following the Latest CDC Mask Guidance

More
News

Jeremy P. Brummond Presents at Webinar for Experienced Construction Attorneys

More
Client Alert

The New Standard Contractual Clauses: Scope, Impact, and Next Steps

More