IDGT
Law & Legal abbreviation · Estate and Family Law
| Stands for | Intentionally defective grantor trust |
|---|---|
| Categories | Law & Legal |
IDGT stands for Intentionally defective grantor trust, an estate and family law abbreviation.
Irrevocable trust drafted so its assets are outside the grantor's estate for estate tax purposes, while the grantor is still treated as owner for income tax and pays the trust's income tax. Those tax payments work as additional tax-free gifts to the beneficiaries.
Example: The owner sold his company shares to an IDGT in exchange for a nine-year promissory note.
Usage notes
Pronounced "I-dig-it". Sales to such a trust avoid capital gains tax because the grantor is treated as selling to himself (Rev. Rul. 85-13). The "defect" usually comes from a power such as the right to swap assets of equal value. Because the assets sit outside the estate, they generally do not receive a stepped-up income tax basis at the grantor's death.
Related abbreviations
More estate and family law abbreviations
- FOC – Friend of the Court
- GAL – Guardian ad litem
- GRAT – Grantor retained annuity trust
- GST – Generation-skipping transfer tax
- HCPOA – Health care power of attorney
- ICPC – Interstate Compact on the Placement of Children
- ILIT – Irrevocable life insurance trust
- JDR – Juvenile and domestic relations district court
- JTWROS – Joint tenants with right of survivorship
- LPA – Lasting power of attorney
- MSA – Marital settlement agreement
- PFA – Protection from abuse order
See all 50 estate and family law abbreviations →
This entry is for general education and is not legal advice. Abbreviation use varies between institutions; always confirm in context.