The Promissory Note Problem

A common estate planning strategy is the sale of assets to a defective grantor trust. Generally speaking, the grantor establishes an irrevocable trust with his family members as the beneficiaries. Thereafter, the grantor sells assets with significant potential for appreciation to this trust, in exchange for a down payment and a promissory note.1 If the trust is structured properly, not only are capital

A common estate planning strategy is the sale of assets to a defective grantor trust. Generally speaking, the grantor establishes an irrevocable trust with his family members as the beneficiaries. Thereafter, the grantor sells assets with significant potential for appreciation to this trust, in exchange for a down payment and a promissory note.1 If the trust is structured properly, not only are capital gain taxes avoided,2 but the grantor also retains the income tax resp

All access premium subscription

Your subscription will include 12 months of Trusts & Estates magazine and access to premium content on WealthManagement.com.

TAGS: Archive
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish