The purpose of this Article is to examine the federal tax consequences of the revocable trust to the grantor and to his estate.Principally due to the grantor's power to revoke the trust and re-vest the trust assets in himself the federal tax consequences to the grantor are in effect, if not in cause, insignificant. The perception that creation of a revocable trust has no federal tax consequences,therefore, is at least to that extent essentially correct, and the discussion herein is merely a summary review of the tax consequences to the grantor upon the trust's creation and during its administration. Perhaps surprisingly, however, the federal tax consequences to the estate can be significant, and the perception is to that extent incorrect. These latter consequences occur with respect to both estate and income taxes, but primarily with respect to income tax. In sum, whether the decedent implements his controlling dispository directions through a will operating upon the probate estate or through a revocable trust operating upon its corpus will have significant federal tax consequences.
C. Douglas Miller and R. Alan Rainey,
Dying with the "Living" (or"Revocable") Trust: Federal Tax Consequences of Testamentary Dispositions Compared,
37 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol37/iss4/4