Clifford Trust

Clifford Trust means:
a type of inter vivos trust, set up for at least 10 years and a day, that makes it possible to turn over title to income-producing assets. Parents put bonds and stocks in such a trust for their children because the children's income is lower and the taxes are therefore also lower. The income from the trust goes to the children for the duration of the trust. When the trust expires, the parents can reclaim the stocks and bonds. Investment income above $600 received by a child under age 14 is taxed at the parents' highest marginal rate under the Tax Reform Act of 1986. Because of the reversionary interest, the assets will be included in the gross estate of the parent. Former IRC (check if this IRC provision is current here) §§671-679.

Description and Definition of Clifford Trust

A short-term trust in which the principal is reserved by the grantor and current income is paid to the beneficiary. Current tax law makes such trusts ineffective.

Resources

See Also

Further Reading

• Clifford Trust in the West's Tax Law Dictionary
• Clifford Trust in “A Dictionary of Taxation”