intentionally defective grantor trust (IDGT)
Definition
A trust that is flawed so that the grantor pays income taxes by keeping the controlling interest in the assets. This tool is used in estate planning. The grantor's estate, however, has a lower value of the amount transferred. The assets are sold to the trust with a 10-15 year promissory note, which keeps the trust in an above market classification, but the assets depreciate faster.
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