Clifford Trust

Clifford Trusts allow grantors to transfer assets that produce income into the trust and then reclaim them when the trust expires. These trusts cannot last for a term of less than 10 years plus one day. Clifford Trusts were once commonly used as an effective and legal means of avoiding large tax expenses; the grantor would shift his assets to a trust which would then later be claimed by a recipient who would ideally be subject to a lower marginal tax rate.

Prior to the Tax Reform Act of 1986, Clifford Trusts were often used to shift assets that produced income to children from their parents. However, this legislation rendered this strategy impractical, as the Act mandated that Clifford Trust income must be taxed to the grantor. Therefore few of these trusts have been created since then.


Investment dictionary. . 2012.

Look at other dictionaries:

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  • Clifford trust — Law. a type of living trust set up for at least a 10 year period, during which the income goes to a beneficiary and after which the principal reverts to the grantor. [after George B. Clifford, plaintiff in a suit against the Internal Revenue… …   Universalium

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