How can I tell if my irrevocable trust is a grantor trust? I donated my life insurance policies to the trust and I am not sure if it is a grantor trust. My sister is the trustee and my kids are the beneficiaries, I have no control over the trust. There is the possibility that the insurance company may demutualize so there my be stock in the trust as well.
can't see the trust document which is crucial for an opinion so why not ask the lawyer that drew it up?
but this is based on what the IRS considers a grantor trust
A trust is considered a grantor trust if the grantor retains certain powers. These powers include:
A reversionary interest of more than 5% of the trust property or income
The power to revoke the trust and/or to return the trust’s corpus/principle to the grantor
The power to distribute income to the grantor or grantor’s spouse
Power over the beneficial interests in the trust
Administrative powers over the trust allowing the grantor to benefit
A trust also becomes a grantor trust if the creator of the trust has a reversionary interest greater than 5% of trust assets at the time the transfer of assets to the trust is made. According to the IRS, any Revocable Trust is considered a Grantor Trust.
Irrevocable in the name is meaningless because many have such a word in their name but meet one of the conditions above
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