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Family Trusts and Trustors (403)
Author: Holmes F. Crouch
Pages: 224
List Price: $19.95
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  • Summary

    FAMILY TRUSTS & TRUSTORS (T/G 403) covers the elements of a valid trust, the meaning of "power of appointment," the federal tax returns required (gift, death, generation-skipping), the designation of family members as successor trustees, and the "economic leveling" opportunity when distributing income and corpus. Also covered:

    • What makes a family trust "abusive"
    • Pre-trust directives in your will
    • Estate "deduction-inclusion" of QTIPs
    • IRS scrutiny of family business transfers
    • Sources of trust income and Form 1041
    • Trust distinction: "simple" vs. "complex"

    Table of Contents
    Family Trusts & Trustors
    Book:  403
    
    Table of Content:
    
    1.  INTRODUCTORY ASPECTS                                1-1
    
        Meaning of “Trustor”                                1-2
        State Law Provisions                                1-3
        The Working Components                              1-5
        Trust Instrument: General Contents                  1-7
        The Trustor & His Property                          1-9
        Meaning of “Power of Appointment”                   1-10
        Beware of Abusive Trusts                            1-12
        Definitions re “Family”                             1-13
        A Trust is Not a Business                           1-15
        The “One Trust” Rule                                1-17
    
    2.  IMPOSITION OF TRANSFER TAX                          2-1
    
        Tax Code Provisions                                 2-2
        Transfers in General                                2-3
        When Insufficient Consideration                     2-5
        The Imposition Mandates                             2-7
        The “Unified” Concept                               2-8
        The Unified Rates & Exclusions                      2-9
        Annual Gift Tax Exclusion                           2-11
        Taxable Gifts Cumulative                            2-13
    
    3.  GIFT & DEATH TAX RETURNS                            3-1
    
        Form 709 Overview                                   3-2
        Schedules A & B: Form 709                           3-4
        Synopsis of 709 Computations                        3-5
        Form 706 Overview                                   3-7
        No Escaping Form 706                                3-8
        Distinction: Executor vs. Trustee                   3-10
        The 9 Asset Schedules                               3-11
        The Deduction Schedules                             3-14
        Other Items of Note                                 3-16
        Death Tax Computation                               3-18
    
    4.  SPECIAL VALUATION RULES                             4-1
    
        Conservation Easement Land                          4-2
        Farm & Business Real Property                       4-3
        Must Attach Schedule A-1                            4-5
        Family-Owned Business Interests                     4-7
        Claims on Schedule T                                4-9
        Minority Interest Discounts                         4-10
        Estate Freeze Limitation                            4-12
        Sections 2701 & 2702: Synopsis                      4-15
    
    5.  GRANTOR TRUST RULES                                 5-1
    
        Rule 1:  Substantial Owner: 5+%                     5-2
        Rule 2:  Reversionary Interests                     5-4
        Rule 3:  Grantor’s Spouse, Etc.                     5-5
        Rule 4:  Death of Beneficiaries                     5-7
        Rule 5:  Beneficial Enjoyment                       5-8
        Rule 6; Administrative Control                      5-10
        Rule 7:  Income for Grantor                         5-11
        Rule 8:  Nongrantor Owners                          5-12
        Rule 9:  Foreign Transfers                          5-13
        Rule 10: Power to Revoke                            5-15
    
    6.  CHARITABLE REMAINER TRUSTS                          6-1
    
        Overview of IRC Sec. 664                            6-2
        Charitable Annuity Trusts                           6-3
        Charitable Remainder Unitrusts                      6-5
        Mandatory Aspects                                   6-7
        Sample Trust Declarations                           6-9
        “Unrelated Business Income” Explained               6-10
        How Remainders Determined                           6-11
        Tables Include Formulas                             6-13
        Loophole for Abuse                                  6-15
    
    7.  SURVIVING SPOUSE TRUSTS                             7-1
    
        The Marital Deduction                               7-2
        Includible in Survivor’s Estate                     7-3
        Deductible Interests Defined                        7-6
        Terminable Interest Property                        7-7
        The QTIP Election                                   7-9
        The Alien Spouse Rule                               7-10
        Qualified Domestic Trust Defined                    7-11
        Making the QDOT Election                            7-13
        Schedule M Summarized                               7-14
        When Surviving Spouse Dies                          7-16
    
    8.  DESIRABLE TRUST FEATURES                            8-1
    
        Don’t Bypass a Will                                 8-2
        IRS “Acceptance Letter”                             8-3
        Confusion over Forms 1041                           8-5
        Clarifying Creation Dates                           8-6
        Declare Trustor’s Intent Early                      8-9
        Article 2: Termination Events                       8-10
        Designation of Successor Trustees                   8-12
        Diagram of Intended Subtrusts                       8-13
        Beneficiary Prioritizing                            8-16
        Trust Property:  Appendix A                         8-17
        Standard Clauses: Appendix B                        8-18
        Powers of Administration: Appendix C                8-19
    
    9.  GENERATION-SKIPPING TRUSTS                          9-1
    
        Overview of GST Law                                 9-2
        Fundamental Definitions                             9-3
        Generation Assignments?                             9-5
        Other Key Definitions                               9-7
        GST Exemption Amount                                9-8
        Self-Allocation or Deemed?                          9-10
        How Allocations Made                                9-12
        Inclusion Ratio for GST Trusts                      9-13
        How/When GST Tax Paid                               9-15
        Rule Against Perpetuities                           9-17
    
    10. SOURCES OF TRUST INCOME                             10-1
    
        Sources Listed on Form 1041                         10-2
        Interest & Dividend Income                          10-3
        Tax-Exempt Interest                                 10-5
        Restructure Proprietorship Income                   10-7
        Family Corporation Stock                            10-8
        Rents & Royalties Income                            10-10
        Pooled Investment Activities                        10-12
        Transactional Gains & Losses                        10-13
    
    11. COMPREHENDING FORM 1041                             11-1
        
        Head Portion Distinctions                           11-2
        Type of Entity Checkboxes                           11-4
        Trust Administration Deductions                     11-7    
        Fiduciary Fees                                      11-8
        Charitable Deduction                                11-10
        Legal & Accounting Fees                             11-12
        Other Items of Note                                 11-13
        Capital Gains & Losses                              11-16
        Schedule D (1041) Allocations                       11-17
        Suspect Transactions                                11-19
    
    12. HOW DISTRIBUTIONS MADE                              12-1
    
        Candidate Distribution Sources                      12-2
        Scrutinizing the Contract                           12-4
        Seek Legal Opinions Early                           12-6
        The Role of Schedule B (1041)                       12-7
        Simple vs. Complex Revisited                        12-7
        Limitation on Deduction                             12-10
        The Computational Sequence                          12-12
        The Beneficiary K-1s                                12-15
        A Simple Trust Example                              12-16
        Other Simple K-1 Uses                               12-19
        Complex Trust & Charities                           12-20
        Property Distributed in Kind                        12-21
        Skip Persons & GST Tax                              12-22

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