Deciding and Converting Between Grantor And Non-Grantor Trust Status (Part I)Deciding and Converting Between Grantor And Non-Grantor Trust Status (Part I)

While properly structured trusts are effective vehicles for achieving transfer-tax planning objectives, clients are increasingly interested in maximizing income tax benefits that those trusts may afford. A choice between grantor and non-grantor trust status is key to accomplishing certain income tax planning goals. However, both types of trusts have their own advantages and disadvantages, and converting one variety into another can raise many issues that can be traps for the unwary.

This article discusses planning techniques unique to both varieties of trusts, assesses overall tax benefits in various fact patterns taking both income tax and transfer tax into account and analyzes certain special cross-border issues and planning opportuniti...