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| Clients often set up irrevocable trusts, which are another class of inter vivos trusts, for other beneficiaries. In an irrevocable trust the all rights to the property transferred to the trust are given up. The basic difference between an inter vivos trust and an outright gift is that the former provides the beneficiary with competent property management and with protection from himself and others who might misuse or waste the gift. If the transferred property constitutes a taxable gift, the value is added to his gross estate at his death for purposes of determining his estate tax liability. Since outright gifts and irrevocable trusts differ only in terms of control over and protection of the beneficiary, the tax consequences are basically the same. |
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