by Thomas D. Begley, Jr., CELA<\/p>\n
Purpose <\/em><\/strong><\/p>\n Income Only Trusts are a means by which seniors transfer assets to a trust rather than to their children. Seniors tend to view transfers to trusts as protection, while they tend to view transfers to children as gifts. Trusts provide them with a sense of dignity and security.<\/p>\n Requirements<\/em><\/strong><\/p>\n Income only trusts are permitted by OBRA-93.[1]<\/a> They must be irrevocable. The trust instrument provides that the grantor or the grantor’s spouse receive all of the income from the trust, but has no access to principal.<\/p>\n Design of the Trust<\/em><\/strong><\/p>\n In order to structure the trust as a Grantor Trust and to receive a step up in basis on death, practitioners often give the grantor a right to substitute and reacquire property and\/or a limited power of appointment. The grantor can reserve the right to income, but the trust must absolutely prohibit any access to principal by the grantor or (more…)<\/span><\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" by Thomas D. Begley, Jr., CELA Purpose Income Only Trusts are a means by which seniors transfer assets to a trust rather than to their children. Seniors tend to view transfers to trusts as protection, while they tend to view…<\/span><\/p>\n