HOUSE_OVERSIGHT_022352.jpg
1.16 MB
Extraction Summary
2
People
4
Organizations
0
Locations
2
Events
3
Relationships
4
Quotes
Document Information
Type:
Financial planning document / presentation slide
File Size:
1.16 MB
Summary
This J.P. Morgan document, marked 'CONFIDENTIAL' and 'HOUSE_OVERSIGHT_022352', is a presentation slide explaining a wealth transfer strategy using an Intentionally Defective Grantor Trust (IDGT). It details a four-step process where a 'Grantor' sells an asset to an IDGT for a note, which allows the remaining trust assets to eventually pass to 'Beneficiaries' free of gift tax. The document also suggests using 'cascading GRATs' to enhance the benefits of this strategy.
People (2)
| Name | Role | Context |
|---|---|---|
| Grantor | Asset seller and trust creator |
The individual who sells an asset to an Intentionally Defective Grantor Trust (IDGT) in exchange for a promissory not...
|
| Beneficiaries | Recipients of trust assets |
The individuals who receive the remaining assets from the IDGT, free of gift tax, after the promissory note to the Gr...
|
Organizations (4)
| Name | Type | Context |
|---|---|---|
| J.P.Morgan |
The firm whose logo appears on the document, likely the author of this financial planning presentation.
|
|
| IDGT (Intentionally Defective Grantor Trust) |
A type of trust used for estate planning. It is treated as a grantor trust for income tax purposes but not for estate...
|
|
| GRATs (Grantor Retained Annuity Trusts) |
Mentioned as a complementary strategy ('cascading GRATs') to enhance the benefits of the IDGT, where remainders from ...
|
|
| HOUSE_OVERSIGHT |
The identifier 'HOUSE_OVERSIGHT_022352' at the bottom of the page suggests this document is part of a collection held...
|
Timeline (2 events)
Not specified
A detailed, four-step process illustrating how a sale of an asset to an Intentionally Defective Grantor Trust (IDGT) works as an estate planning and wealth transfer strategy.
Not specified
Relationships (3)
The Grantor sells an asset to the IDGT in exchange for a promissory note. The IDGT makes payments back to the Grantor.
The IDGT holds assets for the benefit of the Beneficiaries and eventually passes the remaining assets to them.
The Grantor initiates a financial structure (IDGT) with the purpose of transferring assets to the Beneficiaries in a tax-efficient manner.
Key Quotes (4)
"Sell asset at fair market value to the trust in return for a promissory note bearing interest at proper AFR* based upon term of loan"Source
HOUSE_OVERSIGHT_022352.jpg
Quote #1
"After note is paid off, remaining assets in trust are available, free of gift tax, for beneficiaries**"Source
HOUSE_OVERSIGHT_022352.jpg
Quote #2
"To enhance the potential benefits consider funding a series of cascading GRATs – the remainders can be added to the IDGT"Source
HOUSE_OVERSIGHT_022352.jpg
Quote #3
"If Grantor dies before note is satisfied, the fair market value of the note is includible in grantor's estate."Source
HOUSE_OVERSIGHT_022352.jpg
Quote #4
Full Extracted Text
Complete text extracted from the document (1,174 characters)
CONFIDENTIAL
How a sale to an IDGT works
① Sell asset at fair market value to the trust in return for a promissory note bearing interest at proper AFR* based upon term of loan
② Receive payments satisfying terms of note
③ Pay income tax on trust income and realized gain
④ After note is paid off, remaining assets in trust are available, free of gift tax, for beneficiaries**
[Diagram Start]
Grantor <--> ① Sell asset to trust for a note <--> IDGT --> ④ Remaining assets pass to beneficiaries* --> Beneficiaries
Grantor <-- ② Receive payments <-- IDGT
Grantor <-- ③ Pay income tax on trust income and realized gain
[Diagram End]
Grantor <--> ① Sell asset to trust for a note <--> IDGT --> ④ Remaining assets pass to beneficiaries* --> Beneficiaries
Grantor <-- ② Receive payments <-- IDGT
Grantor <-- ③ Pay income tax on trust income and realized gain
[Diagram End]
To enhance the potential benefits consider funding a series of cascading GRATs – the remainders can be added to the IDGT
If the cascading GRATs are successful, at the end of the cascading GRAT terms additional assets can be sold to the IDGT
* AFRs are defined as: 1) short-term - not over three years; 2) mid-term - over three, but not over nine years; 3) long-term - over nine years.
** If Grantor dies before note is satisfied, the fair market value of the note is includible in grantor's estate.
** If Grantor dies before note is satisfied, the fair market value of the note is includible in grantor's estate.
J.P.Morgan
2
HOUSE_OVERSIGHT_022352
HOUSE_OVERSIGHT_022352
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