Grantor Trust

By: Martin M. Shenkman, CPA, MBA, JD

A Trust is classified as a "grantor" trust for income tax purposes if the grantor (the person who sets up the trust) retains certain powers or rights over the trust the income from the trust will be taxed to him or her. This can be done on purpose (called and intentionally defective grantor trust) or accidentally (by failing to carefully review the trust terms or operations).

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