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What to know about IDGTs

On Behalf of | Dec 7, 2021 | Estate Planning |

You’re encouraged to find ways to reduce the taxation that your estate is liable for. One of the estate planning tools that you have in Oregon is called an intentionally defective grantor trust, or IDGT. This trust enables you to defer estate taxes on your property. With this trust, the contents placed within technically disable the grantor from being a legal, taxable owner. Another facet to keep in mind is that an IDGT only taxes the income it generates once a year.

Tax-free growth

For the period of a year, the personal assets you own can increase in value without being taxed. While you’re estate planning, however, look for investments that you can live without for a year. The IDGT gives you the option of delaying taxes by changing the ownership of the assets the trust holds from you to the trust.

Tax deductible deposits

Putting money into your IDGT enables you to reduce your taxable income. Every deposit you make is used as a deduction that you can file with the IRS. Estate planning with a strategy that uses deductibles can lead to vast reductions when done correctly. The IDGT is just one of many estate tools used to reduce your taxable income; another is the charitable trust.

Debt protection

The assets held within an IDGT are protected from creditors. Whether during your life or when your estate transfers, creditors have no claim over the assets in a trust. Essentially, the IDGT is irrevocable, having the highest level of sheltering from taxes and debt that a trust can have. This trust will also avoid creditors once it’s transferred to a beneficiary.

Estate planning in Oregon

An estate plan takes into account trusts, wills and insurance. The more you can isolate your assets, the more those assets avoid taxation or creditors. By isolating your assets within an intentionally defective grantor trust, you provide both privacy and security to your estate.