Installment Sales to Grantor Trusts (ISGT or IDGT)

High net worth individuals sometimes face substantial obstacles in passing wealth from one generation to the next. These can include complex tax questions, and the need for careful consideration of the legacy that will be created. These issues must be considered in conjunction with the needs of the family and the client’s unique beliefs, goals and objectives — and how they can be expressed through the legacy left to succeeding generations. The ability of a client to successfully achieve their estate planning goals depends on the use of the appropriate legal strategies to protect both existing and future wealth.

Since 1979, Buchanan & Stouffer has guided clients through the intricate legal process of preserving valuable property from gift and estate taxes as well as creditor claims. Our attorneys have experience helping clients throughout the Rocky Mountain region understand how installment sales to grantor trusts (ISGT), intentionally defective grantor trusts (IDGT) and other advanced estate planning tools can benefit both their lives and the lives of family members.

Specifically, grantor trusts are designed to shift future appreciation of assets to younger family members with minimum tax consequences. Both ISGTs and IDGTs are commonly thought of as safe techniques to protect and pass on wealth. However, they are not foolproof or automatic — no legal safe harbors exist that ensure that ISGTs or IDGTs will be immune to an IRS challenge. Accordingly, care must be taken that all the necessary formalities are observed and the language of the documents is very precisely written, in order to minimize the likelihood of tax consequences. Finally, these types of planning tactics must be undertaken carefully and conservatively to reduce the likelihood that the IRS will be able to overturn the favorable tax results.

Our team of attorneys understand the importance of establishing a trust that has been precisely tailored to meet the needs of an individual and his or her family members. In doing this, our team brings decades of experience to generate the best possible results for our clients.

In developing estate planning strategies, we work closely with clients to understand their financial circumstances and objectives for their property. Property transferred into a trust should be expected to grow and increase in value. For estate tax purposes, an ISGT or IDGT shifts the future growth on the property placed in the trust to successive generations. If the property fails to increase in value, the estate tax benefits are minimal. Individuals must be prepared to take an active role in their ISGT or IDGT, or employ a trustee to ensure that all the intricate formalities specified in the estate plan are preserved. Our attorneys take great care to help our clients become familiar with the steps that must be taken to successfully minimize prospective estate taxes.

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