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Beneficiary Deemed-Owned Trusts


Cost Free
Presentation Length 1.0 hour

Recorded DateSeptember 8, 2021
CPE:Not available
(archived webinars do not offer CPE credits)
Subject AreaTaxes
Course LevelAdvanced
Course Description

An irrevocable trust that is deemed owned by a beneficiary for income tax purposes (a “Code §678 trust”) can have several uses. First, if the beneficiary is in a lower overall federal and state income tax bracket than the trust, a Code §678 trust can save significant income taxes. Second, a client may be able to sell assets to a Code §678 trust and retain much more benefit and control than a traditional sale to an irrevocable grantor trust.

Code §678 trusts come in many flavors: BDITs, BDOTs, QSSTs, and relatively simply drafted trusts. Learn some of the nuances of various issues in using them during this webinar.


Learning Objectives: 

  • Identify income tax and estate planning benefits to using a Code §678 trust

  • Recall how Code §678(a) works in relation to Code §678(b)

  • Determine how lapses of withdrawal rights affect the design of Code §678 trusts, including what portion is deemed owned after a lapse

  • Identify potential access to a Code §678 trust by the beneficiary’s creditors

  • List steps in planning for and structuring a sale of a Code §678 trust

  • Recall gift tax reporting of a sale of a Code §678 trust

  • Identify sample language when only wanting to shift income to the beneficiary

  • List a trust as a deemed owner of another trust

  • Identify fiduciary income tax advantages and disadvantages of Code §678 trusts

  • Recall QSST as a Code §678 trust

Prerequisites: Knowledge of irrevocable grantor trusts can be gained by attending Formula Transfers for Estate Planning, and a basic understanding of the taxation of beneficiaries of irrevocable trusts can be achieved by attending the course: How to Shift Income to Beneficiaries

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Thompson coburn llp

Steve has drafted trusts and a full range of estate planning documents for clients to help grow, preserve, and transmit their family wealth. He has also prepared organizational documents for limited liability companies, corporations, and partnerships to implement their owners' wishes regarding current and future control and transmission, including bringing in new owners and facilitating exit strategies. 
Steve enjoys helping clients structure their affairs to achieve their personal, business, and financial goals while reducing the drag that taxes imposed on them. His firm provides full service to businesses; however, he also acts as counsel on specialized matters while cooperating and facilitating the continued involvement of an existing legal, accounting, and financial services team. Steve maintains his CPA license but prefers to refer income tax returns to practicing CPAs.

Steve Gorin is the former president and an ongoing contributor to Covenant Place’s strategic initiatives. It is a senior affordable housing community with a groundbreaking model for integrated residents with the surrounding community and facilitating holistic services to enrich their lives. 
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About Our Presenter

Thompson coburn llp

For approximately 90 years, Thompson Coburn LLP has provided the quality legal services and counsel our clients demand to achieve their most critical business goals. Whether helping with a tax, estate planning, real estate or employment issue, navigating a complex acquisition or defending a product or service in litigation, we have the knowledge and resources to meet any legal need.

With over 380 attorneys, we have experience in more than 50 areas of the law. Supported by our firm's state-of-the-art technology, lawyers in our Chicago, Dallas, New York, Los Angeles, Southern Illinois, St. Louis and Washington, D.C. offices enjoy a nationwide practice.