Intentionally Defective Grantor Trust (IDGT)

A trust that allows a trustor to isolate certain trust assets in order to segregate income tax from estate tax treatment on them. IDGTs are most often utilized when the trust beneficiaries are children or grandchildren where the grantor has paid income tax on the growth of assets that they will inherit. Anything contributed to an IDGT by the Grantor will be excluded from the Grantor’s estate for estate tax purposes.