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Grantor Trust Rules

What are the grantor trust rules?

A grantor trust is a type of trust that is made up by a trust agreement instead of a will. According to the, it is a “Trust in which the trustor retains control over the trust property to the extent that he or she is taxed on that property's income.” Given below are a few questions answered by the Experts on issues related to grantor trusts.

If an individual has created an Irrevocable Grantor Trust and put some shares into it, will a gift of shares be based on the current share price? Also, will they need to fill out a gift tax form as well?

The gift value will all depend on the pricing of the company’s shares currently. The individual will have a yearly gift exclusion of at least $13,000 per person so as long as the value of the shares is $13,000 or less for each beneficiary, there would be no gift tax. Now, if the gift value is more than that, the individual will need to fill out a gift tax form and state how much of their lifetime exemption is being used as a gift when filing their return.

If an individual creates a grantor trust and then passes away, will the trust still be considered a grantor trust or a non-grantor trust?

The trust will still be considered a grantor trust and become an irrevocable trust when the grantor passes away. What this means is that the trust cannot be changed by anyone else, and a successor trustee will be assigned in order to resolve or run the trust as per the trust conditions.

In a case where an irrevocable grantor trust is created and the grantor’s children become beneficiaries of the trust and its trustees, does the grantor give their assets to the trust, or do they have to gift them to the beneficiaries who can then transfer it to trust?

If the grantor simply wants to give the assets to the beneficiaries then there will be no reason for creating the trust. The trust is created for storing and safeguarding the assets. The individual will set up the trust to keep the assets until they believe the assets can be handed over to the beneficiaries.

Setting up a grantor trust there are many rules that an individual is not aware of. Not only the grantor trust rules, but also what a grantor trust is, and if the grantor trust can be changed to a different trust. These types of questions and many more can be answered by the thousands Experts.

There are many rules involved in dealing with grantor trusts that you may not be aware of. While a few of the questions stated above may have clarified some of your doubts regarding this issue, it is possible that there are others you may have that are related to your own particular situation. In cases like this, put your queries to the Experts to get professional insights and information that will help you handle your own case efficiently.
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