Trust Matrix – Inter vivos Trusts

This table lays out the Income Tax and Estate Tax treatment of various inter vivos trusts (i.e. trusts funded during a taxpayers life).

Inter vivos
Trust Matrix
Estate Tax Inclusion
Excludable from Taxpayer’s Estate Includable in Taxpayer’s Estate
Income Tax Taxation Non-grantor Trust
  • Simple or complex inter vivos trust
  • Incomplete gift Non-Grantor Trust = ING (e.g. DING, NING)
Grantor Trust
  • Intentionally Defective Grantor Trust (IDGT)
  • Revocable Trust
  • QPRT (during initial trust term)
  • GRAT (during initial trust term)
  • CRAT and CRUT (during initial trust term)

Increased Estate Tax Exemption for 2017

Official numbers from Treasury will not be released until late October, but here are my projections for 2017 estate and gift tax exclusion amounts:

  • The Basic Exclusion Amount (IRC §2010(c)(3)) used to compute the Unified Credit Against Estate Tax will probably be $5,500,000; this would be an increase of $50k (or 0.9%) over 2015’s exclusion amount;
  • This Basic Exclusion Amount of $5,500,000  is equivalent to a Unified Credit of $2,145,800;
  • The Gift Tax Annual Exclusion amount (IRC §2503(b)) should stay at $14,000; we should see the next increase in the Gift Tax Annual Exclusion in 2018.

These predictions assume that Congress makes no changes to the estate and gift tax laws before the end of the year.