The IDGT – A Savvy Real Estate Wealth Transfer Tool

The IDGT – A Savvy Real Estate Wealth Transfer Tool

The current laws and economicssurrounding wealth transfers are just too good to give up. This is especiallytrue with the 2013 tax cliff rapidly approaching and little political agreementto be found for future laws.

When it comes to transferringreal estate, you have many options. However, one you ought to investigate isthe Intentionally Defective Grantor Trust (IDGT).

The ins and outs of thevenerable IDGT was explored recently in a Forbesarticle titled “Reduce Estate TaxesWithout Reducing Your Liquidity.” It’s better not to wade too deeplyinto what makes an IDGT “intentionally defective,” except to say it creates aunique tax situation. Moving the real estate (perhaps your personal residence) intothe IDGT will count as a gift in the year you make the transfer, even thoughyou’ll still be living in the house. Effectively, you are setting up your owntrust as a landlord, and yourself as tenant, complete with rent payments intoyour own trust. Properly done, in the process you will enjoy a great number of taxadvantages.

Employing an IDGT to transferthe family home may be a perfect technique to maximize your wealth transfers, particularlyin a soft real estate market with an uncertain estate and gift tax future. 

Understanding the complexities of TaxPlanning is just a part of successful estate planning. To ensure a successfulplan, we at Idaho Estate Planning will: 1) educate you and your helpers; 2)take the time to get to know you, your family, your desires, your concerns,your goals, and your potential problems; 3) gladly and patiently answerquestions until you understand the concept or issue; and, 4) based onexperience with the problems and results caused by poor planning, help youdesign and implement the plan that fits your concerns and goals. Remember, goodplanning is no accident.

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