This is a trust created by someone (grantor) who transfers assets to the trust. It is irrevocable. The trust exists for a set term of years. At the end of the term of years someone else (such as a child) gets the trust assets.
This person is called the remainderman and gets the remainder. During the term of the trust the grantor retains the right to an annuity payment. When the trust is created the remainder interest is treated as a gift.
The present value of the annuity payments is deducted from the total value of the trust assets to determine the value of the gift.
For instance, $1,000,000 could be transferred to a 2 year trust by a father with the remainder payable to his daughter. Valuation is made under IRS tables in which the rate of return is assumed.
Contact Chicago estate planning attorney Donald Thompson today. Call 312-782-0844.
