Question
Why are intentionally defective grantor trusts useful in planning?
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Answer
Income is taxed to the grantor, but the trust can be outside the estate.
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Question
How is income in respect of a decedent taxed?
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Answer
It is taxed to the recipient and gets no basis step-up.
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Question
Why does a trust or estate get taxed differently from its beneficiaries under the conduit principle?
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Answer
Distributed income is taxed to beneficiaries; retained income is taxed to the trust or estate.
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Question
Why are trusts often pushed to distribute income rather than retain it?
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Answer
They reach the top 37% bracket at very low income levels.
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