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For BDITs, once the trust is set up, you would sell your assets to the trust on a tax-neutral basis. This removes the assets from your taxable estate in exchange for a note receivable from the trust. For SLATs, once the trust is set up, you contribute (instead of sell) the assets to the trust on a tax-neutral basis.
A BDIT is suitable for persons who want to bolster their personal creditor protection, mitigate their estate tax liability but who are not at the stage in life where it is desirable to gift assets.
In a beneficiary-grantor trust an individual (the grantor) creates a trust for another individuals benefit (the beneficiary). For example, parents create a trust for their child, permitting distributions for the childs health, education, maintenance and support.
A BDIT is thus an irrevocable trust that freezes the value of assets for gift and estate tax purposes when the assets are sold to the trust by the beneficiary-seller. The big difference between an IDGT and a BDIT, is that the beneficiary-seller is eligible to receive future discretionary distributions from the BDIT.
An intentionally defective grantor trust (IDGT) allows the grantor to remove assets from their estate but remain the owner of these assets for income tax purposes.
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Unlike a grantor trust, where the grantor is considered the owner of the trust property for tax purposes, a non-grantor trust is a separate legal and taxable entity. It has its own tax identification number (TIN) and files its own income tax return.
Grantor (the U.S. term for settlor) means the non-U.S. Person individual who for U.S. tax purposes funded the trust.
A living trust (sometimes called an inter vivos trust) is one created by the grantor during his or her lifetime, while a testamentary trust is a trust created by the grantors will.

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