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Grantor Trust Modifications in Light Of CCA 202352018

Martin M. Shenkman and Joy Matak caution about negative gift tax consequences according to a new Chief Counsel Advice memorandum.

Irrevocable grantor trusts are ubiquitous in estate planning for good reasons: Taxpayers can give away valuable, appreciating assets to a trust that may be protected from the beneficiaries’ creditors. Transactions, such as loans and sales, between the settlor and grantor trusts are disregarded for income tax purposes, providing significant flexibility and opportunities for further wealth transfer.1  

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