Revocable Grantor Trusts and IDGTs After the Death of the Trustor: Avoiding Gain Triggers, Navigating Basis Calculations

Structuring Trust Documents to Avoid Post-Mortem Income Tax Issues

Recording of a 90-minute CLE/CPE webinar with Q&A

Conducted on Tuesday, February 14, 2017

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE/CPE course will provide estate planners with a comprehensive and practical guide to navigating the proper tax treatment and fiduciary requirements for defective trusts upon the death of the trustor. The panel will discuss income allocation rules, post-mortem asset transfer strategies, and tax reporting requirements for structured revocable and defective grantor trusts.


The tax treatment of grantor trust assets at the death of the grantor often presents estate planners with specific challenges, particularly if the trustor dies prematurely or unexpectedly. Common techniques utilized in structuring intentionally defective grantor trusts (IDGTs) can result in gain recognition and inclusion of assets in the decedent’s gross estate. Planners must ensure their clients are aware of the potential tax consequences that can occur upon a trustor’s premature death.

The general rule is that a revocable grantor trust becomes an irrevocable trust upon the death of the trustor. In cases where the trustor has transferred assets into a revocable grantor trust, the transfer is disregarded for income tax purposes. Upon the death of the grantor, once the transaction is deemed completed to the irrevocable trust, there is uncertainty in some cases as to whether the trust can take a step-up in basis on the transferred assets, or whether the trust takes a carry-over basis from the trustor.

Set up correctly and based on current law, sales or gifts to these trusts can exclude the assets from the grantor’s estate. However, trust powers must be carefully selected and understood in order to avoid an incomplete gift and unintentional inclusion of income in the grantor’s estate.

Listen as our experienced panel of estate planning advisers provides a practical guide to navigating the challenges of defective and grantor trusts after the death of the trustor.



  1. Structuring asset transfer transactions to defective trusts and revocable grantor trusts
  2. Basis of assets transferred to revocable and defective grantor trusts
  3. Impact of grantor’s death on basis of assets transferred to grantor trusts
  4. Drafting trust documents to ensure powers don’t trigger inclusion of trust assets in gross estate


The panel will review these and other key issues:

  • Gain recognition risks on assets transferred to grantor trust in event of premature death of grantor
  • Acceleration provisions on death of trustor
  • Structuring trust documents to ensure trustor powers don’t trigger unforeseen gain
  • Basis questions on assets transferred to grantor trusts


Leo J. Cushing, CPA, LLM
Leo J. Cushing, CPA, LLM

Cushing & Dolan

Mr. Cushing's practice includes all aspects of sophisticated estate planning techniques, asset protection, trust...  |  Read More

Luke C. Bean, Esq., LLM
Luke C. Bean, Esq., LLM

Cushing & Dolan

Mr. Bean concentrates on estate planning, developing strategies to transfer wealth efficiently using sophisticated...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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