by Thomas D. Begley, Jr., CELA<\/p>\n
An Income Only Trust can be designed as a grantor trust. The trust assets are unavailable for Medicaid, but there are some potentially significant tax benefits to the grantor. The Internal Revenue Code contains certain requirements for a grantor trust.[1]<\/a>\u00a0<\/em><\/strong><\/p>\n Income Tax. <\/em><\/strong> Income is taxed at the grantor’s individual tax rate, which is usually less than the trust’s compressed tax rate.<\/p>\n Capital Gains Tax. <\/em><\/strong>Capital gains tax treatment is maintained. This is particularly important if the trust is funded with a primary residence. The \u00a7121 exclusion from capital gains tax can be maintained. The trust must contain a provision that the trustee must allocate the gain on the sale of the home to principal and not to income.<\/p>\n The benefit of the capital gains tax can be achieved for non-home appreciated assets as well.<\/p>\n Gift Tax. <\/em><\/strong>An Income Only Trust can be designed in such a way that a (more…)<\/span><\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" by Thomas D. Begley, Jr., CELA An Income Only Trust can be designed as a grantor trust. The trust assets are unavailable for Medicaid, but there are some potentially significant tax benefits to the grantor. The Internal Revenue Code contains…<\/span><\/p>\n