Irrevocable Trust with trap door

[Joel]

I have a client who is having an irrevocable trust established and the attorney is suggesting it be set up with a trap door. That is, if the grantor asks for proceeds from the trust and the trustee refuses, then the grantor can replace the trustee.

The purpose of the trust is to avoid estate taxes.

I see the following problems;

Since the trust is irrevocable then the income is taxed to the bene (the grantor's Daughter, the trustee) and with the grantor receiving the proceeds how long would the relationship last?

Funding of the trust would result in filing of a gift tax return and reduce the estate tax unified credit

Finally, since I am not an attorney, I am only looking tax consequences.

Any thoughts or suggestions I might further give to the client?

Joel

[RoyDaleOne]

Where did my post go?

Who is the income beneficiary?

Is the trust required to distribute the current income each year?

This can different from the corpus beneficiary.

The trust itself can be taxed on the income.

Not enough information to say much more.

This techinque is sometimes used to freeze estate values.