INTENTIONALLY DEFECTIVE GRANTOR TRUST - IDGT
An irrevocable trust that is used to freeze some assets of an individual for estate tax, not income tax. This estate planning tool is created as a grantor trust to make sure the individual continues to settle his income taxes because income tax laws won’t count or consider the assets that have been taken away from the individual.
However, for estate tax, the worth of the grantor’s estate is lessened by the amount of the asset transfer. The individual will "sell" assets to the trust in return for a promissory note up to certain length, such as 10 years or 15 years. That note will pay sufficient interest to categorize the trust as above market, but the value of underlying assets are awaited to increase at a faster pace.
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Target Return
Pricing model used in valuing a business based on what an investor expects from any capital invested in the firm. It is computed by adding the amou ...
Remainder Man
An individual who receives the remaining principal in a trust account after all required payments have been made, such as those to the beneficiary ...
Average Collected Balance
The total average of the collected funds in a bank account in a month. The balance is calculated by adding the collected balance and dividing it by ...
Bankable Funds
Forms of payment that are accepted at financial institutions. Retailers and other organizations that directly accept payments from customers typica ...
Prudent-Person Rule
A legal maxim that restricts the discretion in a client's account to investments that a prudent person seeking reasonable income and preservati ...
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