Overview of Creating an Intentional Grantor Trust

Stephen R. Akers (managing director of a trust company), Jonathan G. Blattmachr (retired partner, Milbank, Tweed, Hadley & McCloy LLP), & F. Ladson Boyle (professor of law, University of South Carolina) have published their article entitled Creating Intentional Grantor Trusts, 44 Real Prop. Trust & Estate L. 208 (2009). 

A synopsis of the article is below:

The changes in the progressive tax structure over the past decades have greatly reduced the tax incentive to divert income from a taxpayer with substantial income to a trust or its beneficiaries.  As a result, although grantor trusts were once avoided, the “intentional grantor trust” has become a viable option that can, if properly structured, produce significant tax savings for many taxpayers.  In this Article, the authors present an overview of the mechanics of a grantor trust and provide guidance on how to structure an intentional grantor trust to produce tax savings and avoid the potential hazards that may arise.