@krulrich that irrevocable trust can still be a grantor trust with income taxed to the grantor if any of the conditions in IRC SEC 671-678 are met.
- A reversionary interest of more than 5% of the trust property or income;
- The power to revoke the trust and/or to return the trust’s corpus/principle to the grantor;
- The power to distribute income to the grantor or grantor’s spouse;
- Power over the beneficial interests in the trust;
- Administrative powers over the trust allowing the grantor to benefit.
- A trustee, beneficiary, or other person a power exercisable solely by himself to vest the corpus or the income therefrom in himself;
- A United States person who directly or indirectly transfers property to a foreign trust.
these include the power to change beneficiaries. Another feature of grantor trusts is a privilege conferred to the grantor called “the power of sub- stitution.” This power allows the grantor, in their discretion, to remove any asset or assets from the trust corpus in exchange for another asset or assets of equivalent value.
