IDGT With Installment Sale

Law Offices of Andrew H. Dai

Trusted Expertise, Proven Results

At the Law Offices of Andrew H. Dai, we understand how important it is to preserve the efforts you have made to establish and secure your legacy. That’s why we offer comprehensive services for anyone in need of an expert asset protection lawyer across San Mateo County and the greater San Francisco Bay Area.

If you are curious about what an IDGT may be able to accomplish for you, please continue reading on and discover how our firm may be the perfect fit for your estate planning needs…

What Is An IDGT?

IDGT stands for “Intentionally Defective Grantor Trust”. It is an estate planning technique that is used to legally reduce a person’s estate tax obligations.

By placing assets within an IDGT, they are considered to be “outside” of your estate. Therefore, the value of the trust, any of the assets within the trust, and any further appreciating value of those assets will not be subject to estate taxes upon death.

While this tool is incredibly helpful to minimize your estate tax liability, you will still be required to continue paying taxes on any income generated from the assets within an IDGT.

So, if you have to pay income tax on assets within an IDGT, why is it useful?

The assets within an IDGT are protected by an intentional loophole that allows them to grow tax-free. This means that you can maximize the inheritance that your beneficiaries (generally spouses, children, and grandchildren) will appreciate in the future by “locking in” the value of a gift.

This way, the tax levied against your IDGT assets will be based on their value at the point of their installment sale to the trust, and not based on their appreciated value in the future.

Wondering How To Establish An IDGT With Installment Sale?

An installment sale to your IDGT will begin with an initial gift to the trust, typically averaging about 10% of the value of the asset. Over time, you will sell the remaining value of the property to the IDGT. Finally, in exchange for the sale, you will receive a promissory note and have interest paid to you at the AFR (Annual Federal Rate) for the duration of the note’s term.

One of the many benefits of an IDGT with installment sale is that you will not be taxed on any gain from the sale of your asset to the trust. Instead, this action is seen by the IRS as “having sold something to yourself”.

Meanwhile, you can either choose to receive the income generated by the asset within the IDGT, or have the income generated from that IDGT asset remain in the trust as a further benefit to your beneficiaries.

Create An IDGT Installment Plan That Works For You

Deciding the structure of your IDGT installment can seem overwhelming – this area of the law is very complicated. Fortunately, the Law Offices of Andrew H. Dai in Burlingame, CA, is here to help. Our years of experience and eminence in the formation of these plans makes us prepared to advise you in even the most niche circumstances.

Even those who are familiar with IDGTs can benefit from going over their goals and concerns with an expert. And by choosing our firm to assist you throughout this process, you can be confident that you are maximizing the benefits of your decision while minimizing any exposure to liability.

Get Started Today!

IDGT Attorney Andrew Dai practices out of his office in Burlingame, CA, as a top resource for clients seeking thoughtful and professional estate planning services. Our firm prioritizes utilizing a wide range of focused planning tools so that we can create expertly-tailored strategies for each of our clients.

If you are interested in working with our firm – or if you have any further questions – please don’t hesitate to reach out to our office and schedule an appointment for an initial consultation.

You can reach us by calling (650) 817-8888, or by visiting our client contact page. Our team is standing by, ready to start helping you create a plan for the future that you can be assured of.