This is a trust where the grantor retains some extent of control, and the trust is disregarded for federal and income tax purposes. The grantor is taxed individually on the trust income and pays an income tax that would otherwise be paid by the trust or its beneficiaries. Suppose the grantor does not retain a specific range of powers of the trust or benefits, for example, as a life estate in the trust or have any powers to revoke the trust. In that case, the trust will not be included in the estate of the grantor for federal estate tax purposes. Contrast with the non-tax reference to a person who forms or makes gifts to a trust as the “grantor.”

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