A Kentucky Granter Retained Income Trust with Division into Trusts for Issue after Term of Years is a specific type of trust that allows a granter to retain an income interest in the trust assets while also dividing the trust into multiple sub-trusts with the purpose of benefitting their issue (generally children or grandchildren) after a specified term of years. This type of trust can be a valuable estate planning tool for individuals who wish to provide for their descendants while still maintaining some control over the assets during their lifetime. By establishing a Kentucky Granter Retained Income Trust with Division into Trusts for Issue after Term of Years, the granter can potentially minimize estate and gift taxes while ensuring a designated income stream for themselves. One key aspect of this trust is the division into multiple sub-trusts. The granter can select the number of sub-trusts and specify the term of years for each sub-trust. This allows for greater flexibility in distributing the trust assets to different generations and managing the timing of those distributions. For example, a granter could create three sub-trusts, each lasting for a different 10-year term, and allocate the assets among their three children. This way, each child receives their portion of the trust at a different stage in their life, potentially aligning with specific milestones or needs. The Kentucky Granter Retained Income Trust with Division into Trusts for Issue after Term of Years can be advantageous for both the granter and their issue. The granter retains an income interest in the trust assets, ensuring a stream of income during their lifetime. However, any appreciation in the trust assets beyond the retained income passes to the sub-trusts and ultimately to the designated issue. This can provide a substantial transfer of wealth with potential tax benefits. It's important to note that different variations or names for this type of trust may exist, depending on the specific provisions and guidelines set forth in each individual trust agreement. However, the core concept remains the same — a KentuckGranteror Retained Income Trust with Division into Trusts for Issue after Term of Years allows a granter to retain income while distributing the trust assets among multiple sub-trusts for the benefit of their designated issue after a specified term.
Kentucky Grantor Retained Income Trust with Division into Trusts for Issue after Term of Years
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FAQ
The term partition is usually applied to a division of assets between the life tenant and the remaindermen beneficiaries (thus bringing the trust to an end). It can also refer to splitting a trust into separate funds, which then operate independently under new trusts (and may have different beneficiaries and trustees).
If the trust was divided into fractional shares, the trust allocation is updated by recalculating the fraction each time distributions are made, as well as each time income is allocated to principal.
Under Section 663(b) of the Internal Revenue Code, any distribution by an estate or trust within the first 65 days of the tax year can be treated as having been made on the last day of the preceding tax year.
You must agree with all of the other trustees when making trust decisions. So it's worth understanding who they are and deciding if you think the relationship will work.
Grantor Retained Income Trust, Definition A grantor retained income trust allows the person who creates the trust to transfer assets to it while still being able to receive net income from trust assets. The grantor maintains this right for a fixed number of years.
But assets in an irrevocable trust generally don't get a step up in basis. Instead, the grantor's taxable gains are passed on to heirs when the assets are sold. Revocable trusts, like assets held outside a trust, do get a step up in basis so that any gains are based on the asset's value when the grantor dies.
Since a GRAT represents an incomplete gift, it is not a suitable vehicle to use in a generation-skipping transfer (GST), as the value of the skipped gift is not determined until the end of the trust term.
The creator of the trust (the Grantor) transfers assets to the GRAT while retaining the right to receive fixed annuity payments, payable at least annually, for a specified term of years. After the expiration of the term, the Grantor will no longer receive any further benefits from the GRAT.
At the end of the initial term retained by the Grantor, if the Grantor is still living, the remainder beneficiaries (or a trust to be administered for the benefit of the remainder beneficiaries) receive $100,0000 plus all capital growth (which is the amount over and above the net income that was paid to the Grantor).
A 'trust split' is a process of dividing the assets of a trust (generally a family discretionary trust) into a number of smaller sub-trusts to enable one group of beneficiaries to control certain trust assets and another group of beneficiaries to control other assets.