IRREVOCABLE TRUSTS

IRREVOCABLE TRUSTS

by Lee S. McCullough, III

Updated April 25, 2012

 

Irrevocable trusts are an amazing tool with many uses and almost infinite varieties.  This article provides a summary of what these trusts are, how they work, and what some of the options and uses are.

I.  Typical Uses

a.         Asset Protection Trusts.  You can create an irrevocable trust to own cash or other assets that you want protected from creditors.  If the trust is designed correctly and if you give assets away to the trust at a proper time and in a correct manner, the assets can be protected from future creditors or liabilities that you may have.  If the trust is designed as an incomplete gift trust (described in more detail below), you can transfer unlimited amounts to the trust without any gift taxes or other taxes due on the transfer.  An irrevocable trust provides better asset protection than a family limited partnership or limited liability company because an irrevocable trust completely removes an asset from a person’s ownership, rather than simply limiting the remedies of a creditor to a charging order against a family limited partnership or a limited liability company.

b.         Trusts designed for Estate Tax Protection.  For large estates, or estates with highly appreciating assets, the irrevocable trust is often the best tool in an estate planner’s toolbox.  You can create an irrevocable trust to own assets that you don’t want included in your taxable estate.  If the trust is designed correctly and if the transfers that you make to the trust are done in a correct manner, the assets of the trust will not be included in your taxable estate.  For example, you could create an irrevocable life insurance trust to own life insurance policies on your life so that the death benefit is not included in your taxable estate.  Or you could give highly appreciating stock to an irrevocable trust to remove the stock from your taxable estate.  Or you could sell your business to an irrevocable trust so that the kids can inherit the business without paying estate tax.  Or you could start a new business or purchase a new property inside of an already existing irrevocable trust so that the business or asset is out of your estate from the time it is purchased.

c.         Estate Planning Objectives.  You can create an irrevocable trust to ensure that certain assets are set aside for the security of your family.  You can create an irrevocable trust to provide conditions that must be met in order for a person to receive an inheritance.  You can create an irrevocable trust to ensure that a cabin or ranch is preserved and held for certain purposes for a certain length of time.  You can create an irrevocable trust to see that your heirs do not receive too much money too soon or for the wrong purposes.

II.  What is an Irrevocable Trust?

a.         Names and Varieties.  There seems to be an infinite number of names and varieties of irrevocable trusts.  For example, an irrevocable trust may be known as a Dynasty Trust, an Asset Protection Trust, a Legacy Trust, an Irrevocable Life Insurance Trust, an Intentionally Defective Grantor Trust, an Alaska Trust, an Offshore Trust, or an IDIT.  One offshore trust may be designed to be included in a grantor’s estate and another may be designed to be excluded from the grantor’s estate.  One may be taxable to the grantor and another may be taxable to the trust or to the beneficiaries.

b.         Offices and Titles.  The person who creates the trust is called a settlor or, as used in this article, a “grantor.”  The person who controls and manages the trust is called the “trustee.”  The people who are eligible to receive benefits from the trust are called the “beneficiaries.”  The trustee duties may be divided among multiple trustees with different names such as the “Investment Trustee,” the “Qualified Trustee,” or the “Administrative Trustee.”  Some trusts create an office called a “Trust Protector” with power to remove and replace the trustee, or to otherwise ensure that the trust is operated in a manner that accomplishes its intended purposes.

c.         Meaning of the word “Irrevocable”.  If the trust provides that the grantor retains no power to amend or revoke the trust, then the trust is “irrevocable” in regards to the grantor.  This does not prevent a trustee from making distributions to the grantor’s spouse, children, or designated beneficiaries.  In some cases, it is possible for an irrevocable trust to allow the trustee to have discretion to make transfers back to the grantor, because this is done in the discretion of the trustee and the grantor retains no power to require the trustee to make distributions to the grantor.  It is also possible to grant a special power of appointment so that a person other than the grantor can essentially amend or re-write the trust or appoint the assets to any person; thus making an irrevocable trust amendable and revocable by a person other than the grantor.

d.         Control.  The grantor can exert control by placing restrictions, limitations or requirements in the trust document before it is executed.  After the trust is executed, the grantor should not retain or exercise any control or “incidents of ownership” over the trust, or all the purposes and benefits of trust could be jeopardized.  For this reason, it is important that the trust document be designed carefully according to the wishes of the grantor, that the trustees and protectors are chosen carefully, and that the drafter of the trust create sufficient flexibility to adapt to changes in the laws as well as changes in the circumstances of the grantor and the beneficiaries.  The best way for the grantor to retain control may be to contribute assets to an LLC of which the grantor is a manager, and then contribute the LLC interests to the trust.

e.         Trust Design and Drafting.  Designing and drafting an effective irrevocable trust requires years of training and experience, as well as time and effort to understand the wishes of the grantor and to anticipate the possible problems, concerns, and issues that may arise in the future.  It is impossible to design and draft an effective trust without a thorough knowledge of state laws, income tax laws, and gift and estate tax laws pertaining to trusts.  It is also impossible to create an effective trust without careful analysis and customization based on the wants and needs of each individual grantor.  Many problems are created when a person attempts to create their own trust using a generic software package, or when a general practice attorney attempts to create a trust without a knowledge of all the applicable laws or experience with trust design and drafting.

III.  Asset Protection Features of an Irrevocable Trust

a.         Which Laws Apply to an Irrevocable Trust?.  Trusts are governed by state laws, not federal laws; but some federal laws do have an effect on irrevocable trusts, including federal tax laws and federal bankruptcy laws.

The Uniform Trust Act provides that, “The meaning and effect of the terms of a trust are determined by: (1) the law of the jurisdiction designated in the terms unless the designation of that jurisdiction’s law is contrary to a strong public policy of the jurisdiction having the most significant relationship to the matter at issue; or (2) in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.”[1]

A grantor can generally select the law that will govern the meaning and effect of the terms of the trust, even if the jurisdiction selected has no other connection to the trust.  The laws governing the administration of the trust are generally the laws of the state designated in the trust instrument or the laws of the state where the administration occurs.[2] It is also possible to design a trust so that the governing law will change as the location of the trustee is changed from one jurisdiction to another.

Because of this ability of a grantor to choose the state law that will govern the trust, many states have amended their laws to make them more competitive in order to attract business for their state.  Many attorneys engage in “forum shopping” in order to find the best available laws for their clients.

For example, a California resident may choose to create a South Dakota trust if they want the trust to last indefinitely and not be terminated by the California rule against perpetuities.  The California resident could create a trust document that states that the trust is governed by South Dakota law, and the California resident would then appoint a trustee located in South Dakota and meet any other requirements set forth under South Dakota law.

Why would you want to shop for better laws?  Most states do not allow a grantor to be included as a beneficiary of a trust without subjecting the assets of the trust to the creditors of the grantor.  Twelve states do allow asset protection for a “self-settled trust” (a trust that includes the grantor as a potential discretionary beneficiary).[3] In many states, it is probable that a creditor or ex-spouse of a beneficiary can compel distributions from a trust.[4] Several states specifically support the absolute discretion of a trustee in withholding distributions from a creditor or ex-spouse of a beneficiary.  Many states limit the duration of a trust, while others allow for unlimited duration or a duration lasting hundreds of years.  Some states have a state income tax on trust income, and others do not.

Although it is tempting to create a trust in a state with favorable laws, it is not completely reliable.  There is a chance that a court in your home state will recognize the laws of the state where you intend the trust to be located, but there is an equally good chance that a court in your home state will disregard the laws of the trust state and use their own laws.  There are not many cases on this issue and the outcome in your case may depend on many facts and circumstances.  Therefore, while it doesn’t hurt to establish a trust in a state with favorable laws, it should not be relied on as the basis for your asset protection plan.  It is better to create a trust that will hold up in any state.

b.        Using Irrevocable Trusts for Asset Protection.  Asset Protection is one of the main reasons that people forum shop for the most advantageous state laws.  Not only is asset protection important to many people in and of itself, but it is also a critical factor in keeping the assets of a trust outside of the taxable estate of the grantor and the beneficiaries.  The tax law actually relies on state asset protection laws to determine if a trust is includable in the grantor’s estate.  If creditors can reach the trust assets under applicable state law, then the assets are also included in the grantor’s taxable estate.[5]

Four states seem to stand out as the best states for asset protection in regards to irrevocable trusts.  Below, I have provided a summary of the advantages offered by these four states:[6]

1.         Alaska Trust Law.  These are some of the advantages of Alaska trust law:

a.        Creditor protection is allowed for certain self-settled trusts.

b.        A trustee’s ability to make or withhold discretionary distributions of income or principal is absolute.  In other words, a beneficiary or the creditor of a beneficiary is not able to force a distribution if it is left in the discretion of a trustee.

c.        A grantor may retain a power to veto distributions or a testamentary power of appointment without jeopardizing asset protection.

d.        The statute of limitations for a fraudulent transfer claim is four years for future creditors, or one year after discovery for past creditors.

e.        There are no significant exceptions for asset protection of a beneficial interest.

f.        The statute provides that express or implied understandings regarding distributions to a grantor are invalid.

g.        There is statutory support for a no-contest clause.

h.        The allowable duration of an Alaska trust is 1,000 years.

i.         Alaska has no state income tax.

2.         Nevada Trust Law.  These are some of the advantages of Nevada trust law:

a.        Creditor protection is allowed for certain self-settled trusts.

b.        A trustee’s ability to make or withhold discretionary distributions of income or principal is absolute.  In other words, a beneficiary or the creditor of a beneficiary is not able to force a distribution if it is left in the discretion of a trustee.

c.        A grantor may retain a power to veto distributions or a testamentary power of appointment without jeopardizing asset protection.

d.        The statute of limitations for a fraudulent transfer claim is two years for future creditors, or six months after discovery for past creditors.  Transfers are deemed discovered when reflected in a public record.

e.        There are no exceptions for asset protection of a beneficial interest.

f.        The allowable duration of a Nevada trust is 365 years.

g.        Nevada has no state income tax.

3.         Delaware Trust Law.  These are some of the advantages of Delaware trust law:

a.        Creditor protection is allowed for certain self-settled trusts.

b.        A trustee’s ability to make or withhold discretionary distributions of income or principal is absolute.  In other words, a beneficiary or the creditor of a beneficiary is not able to force a distribution if it is left in the discretion of a trustee.

c.        A grantor may retain a power to veto distributions, a testamentary power of appointment, or a power to replace a trustee with an unrelated and non-subordinate replacement, without jeopardizing asset protection.

d.        The statute of limitations for a fraudulent transfer claim is four years for future creditors, or one year after discovery for past creditors.

e.        There are no significant exceptions for asset protection of a beneficial interest.

f.        The statute provides that express or implied understandings regarding distributions to a grantor are invalid.

g.        There is statutory support for a no-contest clause.

h.        The allowable duration of a Delaware trust is unlimited for personal property and 110 years for real estate.

i.         There is no state income tax, except for trusts that accumulate income for Delaware residents.

4.         South Dakota Trust Law.  These are some of the advantages of South Dakota trust law:

a.        Creditor protection is allowed for certain self-settled trusts.

b.        A trustee’s ability to make or withhold discretionary distributions of income or principal is absolute.  In other words, a beneficiary or the creditor of a beneficiary is not able to force a distribution if it is left in the discretion of a trustee.

c.        A grantor may retain a power to veto distributions, a testamentary power of appointment, or a power to replace a trustee with an unrelated and non-subordinate replacement, without jeopardizing asset protection.

d.        The statute of limitations for a fraudulent transfer claim is four years for future creditors, or one year after discovery for past creditors.

e.        There are no significant exceptions for asset protection of a beneficial interest.

f.        The statute provides that express or implied understandings regarding distributions to a grantor are invalid.

g.        The allowable duration of a South Dakota trust is infinite.

h.        South Dakota has no state income tax.

In addition to the factors listed above, Nevada has two additional practical benefits.  First, the other top states require that some or all of the trust assets be deposited in the jurisdictional state, and Nevada does not.  Second, many states require that the jurisdictional trustee be a financial institution located in the jurisdictional state.  Using a financial institution as a trustee often creates significant cost, inconvenience and complexity for the grantor.  Nevada allows the jurisdictional trustee to be a resident individual.  While it is more convenient and less expensive to appoint an individual as the resident trustee, there is some risk that the trust will fail to qualify to be governed by the laws of a state if the individual fails to fulfill the responsibilities required by the statute or if a court determines that the individual is not qualified or capable of serving as a legitimate trustee.  It is critical to find a trustee who can ensure that the trust will hold up under attack, but without resulting in unnecessary cost, inconvenience or complexity.

The use of offshore irrevocable trusts is another issue that is beyond the scope of this article.  Suffice it to say that over 30 court cases in the last ten years have held that a self-settled offshore trust is void because it is against public policy.  Many of these cases have resulted in favorable settlements paid to a creditor, some exceeding the amount of money in the offshore trust.

c.        Other Factors for Protecting Assets using an Irrevocable Trust.  In addition to picking the best jurisdiction for an irrevocable trust, there are many other factors that must be present if an irrevocable trust is to succeed in protecting assets from the creditors of the grantor.  First, there are many essential issues involved in the drafting of an irrevocable trust that provides asset protection including careful design of spendthrift clauses, discretionary distribution clauses, ascertainable standards, powers of appointment, and more.  Most importantly, the transfer to an irrevocable trust must be done at a time and in a manner that it is ethical, legal, and appropriate.  When asset protection planning is done in an ethical and legal manner, it is generally very effective.  When asset protection planning is done in an unethical or illegal manner, judges often find ways to ensure that the planning is not effective in protecting assets.  A transfer made with actual intent to delay, hinder, or defraud creditors is called a fraudulent transfer.[7] If a creditor can prove that a fraudulent transfer has occurred, then they can pursue and attach the assets that were involved in the transfer.

IV.  Tax Treatment of Irrevocable Trusts

a.         Income Tax Treatment of Irrevocable Trusts.  All irrevocable trusts fall into one of three categories for income tax treatment: (1) grantor trusts which are taxable to the grantor, (2) simple trusts which are taxable to the income beneficiaries, and (3) complex trusts which are taxable to the trust itself, except to the extent that distributions are made, in which case the income flows out to the beneficiaries.

Complext trusts are in the highest income tax bracket.  Grantor trusts and simple trusts automatically avoid this problem because by definition the income is not taxable to the trust as long as it remains a grantor or simple trust.  A complex trust can avoid this problem by simply distributing all income by the end of each calendar year.

Most irrevocable trusts are intentionally designed to be taxed as a grantor trust.  A “grantor trust” is a trust that is treated as if it is owned by the grantor for federal income tax purposes because the grantor retains one or more of the powers described in Sections 670-678 of the Internal Revenue Code.  Thus, any income, deductions, or other tax attributes belonging to the trust, are allocated to the grantor.

Because the trust is considered the same as the grantor for federal income tax purposes, the following benefits can be realized from a grantor trust: (1) the trust is an eligible shareholder of an “S” corporation if the grantor would be an eligible shareholder,[8] (2) the trust can own a home and the grantor can receive all the tax benefits of home ownership, (3) the grantor can sell a life insurance policy to the trust without triggering the transfer for value rules or any other income tax consequences,[9] (4) the grantor can sell assets to the trust without recognizing capital gains on the sale and without reporting the sale on income tax returns,[10] (5) the grantor can pay the income taxes due on the earnings of the trust without it being considered a gift to the trust,[11] (6) interest payments between the trust and the grantor are not deductible to the payer nor are they interest income to the payee,[12] and (7) forgiveness of debt has no income tax consequences. These income tax benefits create many exciting estate planning opportunities, some of which are described in Section V below.

b.         Gift and Estate Tax Issues Pertaining to Irrevocable Trusts.  Irrevocable trusts can be designed so that transfers to the trust are incomplete gifts for gift tax purposes and the assets of the trust are included in the grantor’s taxable estate, or they can be designed to that transfers to the trust are complete gifts for gift tax purposes and the assets of the trust are not included in the grantor’s taxable estate.

If the grantor retains a power to veto distributions proposed by the trustee, this power is sufficient to cause gifts to the trust to be considered incomplete for gift tax purposes and the assets of the trust to be included in the grantor’s estate.[13] Under the laws of certain states, a grantor is allowed to retain a veto power without jeopardizing the asset protection offered by an irrevocable trust.  This allows a grantor to create and fund a trust that is protected from creditors, but transfers to the trust are not subject to gift taxes, even though the assets have a value far in excess of the gift tax exclusions and exemptions.

On the other hand, it is also possible to create an irrevocable trust that is not included in the grantor’s estate.  In order to keep a trust outside of the grantor’s estate, the grantor generally must not retain any use, possession, right to the income or other enjoyment, right to alter the use, possession or enjoyment, or other incidents of ownership over the property of the trust.[14]

c.         Generation Skipping Taxes and Irrevocable Trusts.  The purpose of the generation skipping tax is to prevent a person from avoiding the estate tax at multiple generations by making transfers to individuals who are two or more generations removed from the grantor.  The generation skipping tax rules are complex, but the basic principal pertaining to irrevocable trusts is quite simple – avoid the generation skipping tax at all costs.  In order to do this, the grantor must ensure that all transfers the trust are in the form of a gift that is covered by generation skipping tax exemption, or in the form of a loan or sale, which are not subject to the generation skipping tax.

For example, if I make a $1,000,000 gift to an irrevocable trust, I should file a gift tax return reporting that I am allocating my $1,000,000 lifetime gift tax exemption and $1,000,000 of my generation skipping tax exemption to the gift.  This ensures that the trust is 100% exempt for generation skipping taxes.  After the gift is made, I can make additional loans or sales to the trust without affecting the generation skipping tax treatment of the trust.  The trust can then make distributions to future generations without any generation skipping taxes.

d.         Structuring Sales to Irrevocable Trusts.  In order to ensure that a sale to an irrevocable grantor trust is effective in removing the assets of the trust from the taxable estate of the grantor, the following points should be considered:

1)         The trustees should open a bank account in the name of the trust and in its tax ID number.  The trustee should keep appropriate books and records for the trust and treat the trust as a separate legal entity for all purposes.

2.         The trustee located in the jurisdiction of choice should keep books and records for the state of jurisdiction, hold annual meetings for the trust, and any other requirements set forth by state law or other administrative actions which show that the trustee is a legitimate trustee and that the trust is truly being administered in the desired jurisdiction.

3.         There should be no express or implied understanding whereby it is shown that the grantor retains control or incidents of ownership over the trust or its assets.

4.         Any property being gifted or sold to the trust should be appraised or a value otherwise established and documented to prove that the sale was made for fair market value.

5.         Assets should be retitled, stock certificates reissued, and the owner and beneficiary of insurance policies should be changed in accordance with any sale.

6.         The trust should have some “seed money” or other capital equal to at least ten percent of the value of assets being sold to the trust, or the promissory note used in the purchase should be guaranteed by the beneficiaries.

7.         Any promissory note should accrue interest at a rate described in Sections 1274(d) and 7872 of the Internal Revenue Code.

8.         Some payments should be made on the note on a regular basis to prove that there is an intention to repay the note.

9.         An amortization schedule should be kept to track the payments and remaining balance on the promissory note.

10.       Tax reporting should correctly recognize the existence of the trust.  K-1s and 1099s should be issued to the trust.  The trust should file form 1041 and check the box indicating that it is a grantor trust.  The trustee should sign form 1041 on behalf of the trust.  The trustee should include an attachment with the tax return showing the income and other items which are attributable to the grantor, as described in the instructions for form 1041.

V. What are some practical uses of Irrevocable Trusts?

a.        Transfers to Incomplete Gift Trusts for Asset Protection.

Tim sold his business and ended up with $20,000,000 in cash.  Tim had no current creditors or liability concerns, but he wanted to put the money in a safe place so he could begin some new entrepreneurial activities without putting the money at risk.  Tim was not concerned about estate taxes because he was young, single, and he had many charitable interests that he wanted to benefit from his estate.  Tim created an irrevocable trust but retained a veto power over distributions so that transfers to the trust would be incomplete gifts for federal gift tax purposes.  Because there were no gift tax limits on the amount he could transfer, Tim was able to transfer the bulk of his funds to the trust without any tax consequences.  Tim chose to have the trust governed by the law of Nevada so that no one could compel the trustee to make distributions to the creditor of any beneficiary.  Tim’s trust gave the trustees discretion to make or withold distributions to the beneficiaries as determined by the trustees, subject to his veto power.  Tim used an Alaska trust company as one trustee, but he appointed his trusted CPA as the trustee with power over distributions.  Tim appointed his attorney and his brother as the trust protectors with power to remove and replace the trustees.  The trust protectors also had a special power of appointment, exercisable only with Tim’s consent, to appoint the trust assets to any person other than themselves, in order to provide maximum flexibility.  In order to keep the trust completely off of his personal financial statement and tax returns, Tim chose to have the trust pay its own income taxes.  The asset protection provided by this trust gave Tim enough peace of mind and security to allow him to take some personal risks on the new business ventures that he wanted to pursue.

b.        Gifts and Sales of Life Insurance Policies.

Mark owned a business that had a value in excess of the estate tax exemptions of he and his wife.  He also owned a $4,000,000 life insurance policy.  If Mark and his wife died while owning the policy, roughly half of the proceeds would go toward estate taxes on the policy itself!  If Mark gave the policy to an irrevocable grantor trust (such as a typical irrevocable life insurance trust or ILIT), there would be no estate tax on the policy proceeds, unless Mark died within three years of the transfer because of the three-year look-back rule found in Section 2041 of the Internal Revenue Code.

An even better plan would be for Mark to give cash to the irrevocable trust in an amount equal to the current value of the insurance policy.  A cash gift is not subject to the three year look back rule found in Section 2041 of the Internal Revenue Code.  The trust could then pay the cash to Mark to purchase the policy from him.  A sale of a policy is also not subject to the three-year look-back rule found in Section 2041 of the Internal Revenue Code.  This gift of cash followed by a sale of the policy is a tax-free method of removing all the life insurance from their taxable estate.  This way, the entire $4,000,000 could be used to pay estate taxes on other assets they have, or if there were no other taxable assets, the entire amount could benefit their children.

c.        Gifts and Sales of Appreciating Assets.

John was a California resident who owned 25% of the outstanding stock of a software company with tremendous potential for growth and income.  John wanted to remove the asset from his estate in order to protect the asset from estate taxes as well as potential future creditors.  John wanted to retain as much control and flexibility as possible.  He also wanted to provide for himself, his wife Susan, and their three children.  John had $800,000 in a bank account and a home worth $600,000.  He also had a life insurance policy with a cash value of $100,000 and a death benefit of $3,000,000.  The current value of his stock was $1,000,000.

John created an irrevocable trust under the laws of the State of Nevada.  The trust was designed as a “grantor” trust so that John would be treated as the owner of the trust for income tax purposes and all income and deductions would flow through to John.

John made a cash gift of $200,000 to the trust.  He filed a gift tax return reporting the gift and allocating gift tax exemption and generation skipping tax exemption to the gift, but no taxes were due.  John then sold his stock and his life insurance policy to the trust in exchange for a promissory note equal to the fair market value of the stock and the life insurance policy, which was $1,100,000.  There was no tax due on the sale because it was a sale from a grantor to a grantor trust.  The trust made regular payments to John on the note, using the cash that John had gifted to the trust and future earnings from the stock.  There were no tax consequences from the interest income on the note because it was a transaction between a grantor and a grantor trust.  Each year, the income from the earnings of the stock was allocated to John, and he paid the tax from personal funds, allowing the assets of the trust to grow without taxation.  This payment of income taxes on behalf of the trust had the economic effect of an annual gift to the trust, but no gift taxes were due.  Eventually, the company was sold and the trust received $15,000,000 in exchange for the stock.  The trust paid John the amount remaining on the promissory note and kept the other $14,000,000 in the trust, protected from future creditors or estate taxes.

As you can see, irrevocable trusts are very complex and powerful tools, to be used with caution and great care.  Because of the many varieties and options involved, the design and crafting of an irrevocable trust that accomplishes the purposes of a grantor is an exciting and interesting process.

Lee S. McCullough, III is a partner in the law firm of McCullough Sparks, exclusively focusing on estate planning and asset protection.  Lee is an adjunct professor, teaching estate planning at the J. Reuben Clark Law School at Brigham Young University.


[1] Uniform Trust Act Section 107.  Restatement (Second) of Conflict of Laws Sections 273, 280.

[2] Uniform Trust Act Section 108.

[3] Comparison of the Twelve Domestic Asset Protection Statutes, by David G. Shaftel, ACTEC Journal 293 (2009).

[4] State Third Party Discretionary and Spendthrift Trust Statutes, by Richard W. Nenno, Wilmington Trust Company (2008); Third Restatement of Trusts Sections 50 and 60.

[5] Treasury Regulation 20.2036-1(b); Rev. Rul. 76-103, 1976-1 CB 293.

[6] See Comparison of the Twelve Domestic Asset Protection Statutes, by David G. Shaftel, ACTEC Journal 293 (2009).

[7] Uniform Fraudulent Transfer Act Section 4(a)(1).

[8] Internal Revenue Code Section 1361(c)(2)(A)(i).

[9] Rev. Rul. 2007-13, 2007-11 I.R.B.

[10] Rev. Rul. 85-13, 1985-1 CB 184.

[11] Rev. Rul. 2004-64, 2004-2 CB 7.

[12] Rev. Rul. 85-13, 1985-1 CB 184.

[13] Treasury Regulation 25.2511-2(c).

[14] The many rules for keeping the assets of an irrevocable trust outside of the taxable estate of a grantor are beyond the scope of this Article; but see generally Sections 2036, 2038, 2042 of the Internal Revenue Code.