Loans from Trusts

Speakers: Jonathan G. Blattmachr and Martin M. Shenkman When and why might an irrevocable trust make a loan to a beneficiary or the grantor who created the trust? Why would a trustee want to make loans from a trust to a beneficiary? What are the financial and tax consequences? What are the criteria for a transfer to be respected as a loan by the IRS and creditors? What factors should be documented? What are the different tax treatments of a loan versus a distribution or other characterization of the transaction? What are the benefits of having a non-fiduciary have an express power to loan trust assets to the grantor who created the trust? Using the power to loan to support characterization of the trust as a grantor trust for income tax purposes (a swap power may not be 100% guarantee of that result). IRC Sec. 675. How can a loan power provide access to trust assets for taxpayers trying to use exemption? What risks might loaning the grantor trust assets pose? What interest rate might be charged? Handouts One Slide Per Page