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“Gilead Sciences employees reviewing IDGTs can benefit from understanding how these trusts may support long-term legacy planning, although qualified legal and tax professionals should review these strategies to determine whether they fit into their overall goals.” ~ Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.
“Gilead Sciences employees considering an IDGT should recognize how this strategy may support long-term wealth transfer goals, although these structures should be reviewed with qualified legal and tax professionals to determine whether they align with each household’s broader plan.” ~ Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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How intentionally defective grantor trusts (IDGTs) work.
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The advantages and potential limitations of using an IDGT.
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Key considerations for Gilead Sciences employees evaluating this type of planning strategy.
An irrevocable trust arrangement known as an intentionally defective grantor trust (IDGT) allows the grantor to move assets out of their taxable estate while still being treated as the owner of those assets for income tax purposes. Many people, including Gilead Sciences employees with high-growth or income-producing holdings, may benefit from using this strategy to support long-term wealth preservation.
How an Intentionally Defective Grantor Trust Works
For tax purposes, different kinds of trusts receive different treatment, and understanding the distinctions can help Gilead Sciences professionals review planning strategies more effectively.
Revocable Trusts
In a revocable trust, the grantor is taxed on trust income and is regarded as the owner for income tax purposes. A separate trust income tax return is usually unnecessary. These assets generally remain inside the grantor’s taxable estate because the grantor maintains full control.
Irrevocable Trusts
An irrevocable trust is treated as its own tax entity, filing its own return and taking its own deductions. When properly drafted so the grantor does not retain certain powers or interests, assets transferred to an irrevocable trust are generally removed from the taxable estate, a detail that can matter for Gilead Sciences professionals with substantial savings or investment holdings.
How IDGTs Combine These Features
An IDGT is structured as an irrevocable trust for estate and gift tax purposes, removing assets from the taxable estate, but is treated as a grantor trust for income tax purposes. As long as the grantor pays income taxes on trust earnings, the trust’s assets can grow outside the estate, which may appeal to Gilead Sciences professionals with long-term legacy goals.
Why It’s Called “Intentionally Defective”
The trust is drafted so that, under IRS grantor-trust rules, the grantor remains the owner for income tax purposes due to certain retained powers. At the same time, the trust is irrevocable for estate tax purposes, allowing the assets to remain outside the taxable estate—a structure that may assist with multigenerational planning.
Advantages of an Intentionally Defective Grantor Trust
Because an IDGT is a grantor trust for income tax purposes, the grantor pays income tax on trust earnings. This leads to two important benefits that may interest Gilead Sciences employees with high-value assets:
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- Trust assets can grow for beneficiaries without being reduced by income tax payments.
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- Income tax paid by the grantor reduces the taxable estate without being classified as a gift.
- This dynamic—where grantors use personal funds to pay taxes that would otherwise reduce trust assets—is often referred to as a “tax burn.”
How Assets Are Transferred to an IDGT
Gilead Sciences employees reviewing wealth transfer strategies may encounter two common approaches:
1. Gift or Partial Gift/Sale
A grantor can move assets to an IDGT as a gift. If the gift stays within the lifetime gift and estate tax exemption, it typically does not create out-of-pocket gift tax. Some planning approaches combine a partial gift with a sale to balance estate goals.
2. Sale to the IDGT
Many grantors sell assets to an IDGT in exchange for a promissory note with an interest rate at or above the IRS Applicable Federal Rate (AFR).
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- The sale is typically not treated as a taxable gift if conducted at fair market value.
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- Appreciation above the AFR occurs outside the grantor’s estate for beneficiaries.
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- When AFR rules and loan requirements are followed, the note is treated as valid consideration and carries an interest obligation.
Potential Drawbacks of an IDGT
Once established, an IDGT is difficult to modify, similar to other irrevocable trusts. Outcomes also depend on the trust assets growing at a rate higher than the AFR. If that does not occur, the intended estate planning benefits may fall short—an important consideration for Gilead Sciences employees reviewing various asset types.
Who Might Consider an IDGT?
An IDGT can be appealing for families facing potential estate tax exposure, especially when transferring assets with strong growth potential. This approach works best when the grantor has sufficient liquidity to continue paying the trust’s income taxes personally, a factor some Gilead Sciences employees review when assessing retirement and estate liquidity. Because the structure requires precise legal drafting, it should be established with qualified legal counsel.
Need Support with IDGTs or Retirement Planning?
The Retirement Group can assist you in reviewing whether an IDGT fits into your broader retirement and estate plan as a Gilead Sciences employee. For guidance tailored to your long-term goals, call us at (800) 900-5867 .
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Sources:
1. BMO Wealth Management.
Herman, Brad.
Intentionally Defective Grantor Trust.
BMO Financial Group, Oct. 2021,
https://uswealth.bmo.com/media/filer_public/8b/3f/8b3f85c6-21b0-407e-bfbf-0f9b181c1673/bwm_idgtarticle_1103.pdf
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2. Fidelity Wealth Management.
“What Is an Intentionally Defective Grantor Trust (IDGT)?”
Fidelity Viewpoints
, 4 Dec. 2025,
https://www.fidelity.com/viewpoints/wealth-management/insights/intentionally-defective-grantor-trusts
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3. Hirtle, Callaghan & Co.
Estate Planning With Intentionally Defective Grantor Trusts.
Hirtle, Callaghan & Co., 2020,
https://www.hirtlecallaghan.com/wp-content/uploads/2020/08/Intentionally-Defective-Grantor-Trusts.pdf
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4. Nevada Trust Company.
Ford-Grella, Jaclyn. “How Intentionally Defective Grantor Trusts Can Safeguard Assets for Future Generations.”
Nevada Trust Company
, 10 Dec. 2024,
https://www.nevadatrust.com/how-intentionally-defective-grantor-trusts-can-safeguard-assets-for-future-generations/
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Gilead ensures comprehensive health coverage for both full-time and part-time employees by offering competitive medical, dental, and vision plans. Full-time employees, as well as part-time employees working at least 30 hours a week, are eligible for a range of health benefits, including coverage for spouses, domestic partners, and dependent children. This benefits package includes life and disability insurance, health savings accounts, and wellness services such as biometric screenings and fitness reimbursements, aligning with industry standards(Gilead_2016_Company_Peo…).
In what ways does Gilead's professional development program contribute to the personal and career growth of its employees? How does Gilead gauge the effectiveness of these development initiatives, and what feedback mechanisms are in place to continually improve the offerings?
Gilead’s professional development program contributes to employees' personal and career growth through extensive training opportunities, leadership development programs, and an MBA program in partnership with Golden Gate University. Gilead monitors the effectiveness of these initiatives through completion metrics, feedback surveys, and by tracking career progression. A continuous feedback loop ensures that employee development programs evolve based on participants’ experiences and business needs(Gilead_2016_Company_Peo…).
Gilead emphasizes a pay-for-performance model in its compensation structure. How does this model operate in practice, and in what ways are performance metrics tied to employee compensation at Gilead? Moreover, how does the company ensure transparency and fairness in its pay practices?
Gilead operates a pay-for-performance model, where employee compensation is directly tied to individual performance evaluations and business results. Regular reviews ensure that compensation remains fair and competitive, with transparency maintained through structured performance assessments. Gilead promotes pay equity, regularly reviewing compensation practices to ensure fairness and alignment with market conditions(Gilead_2016_Company_Peo…).
Given the unique challenges associated with employee parental leave, how does Gilead support employees who are navigating this transition? Furthermore, how are Gilead's policies aligned with or surpassing industry standards regarding parental leave and adoption benefits?
Gilead supports employees during parental leave transitions by offering 12 weeks of paid leave for new parents in the U.S., along with adoption benefits and reimbursements of up to $5,000. This benefit, extended to both U.S. and international employees, ensures legislative compliance and alignment with market standards, often surpassing industry norms(Gilead_2016_Company_Peo…).
With the increasing importance of mental health support in the workplace, how does Gilead's Employee Assistance Program (EAP) address the diverse wellness needs of its employees? In what ways does Gilead promote the utilization of these services to ensure engagement and effectiveness?
Gilead’s Employee Assistance Program (EAP) addresses a broad range of wellness needs, including mental health support, counseling, and legal or financial assistance. The company promotes these services through internal communications and wellness campaigns, ensuring employees are aware of and engage with these offerings, which are designed to provide confidential and comprehensive support(Gilead_2016_Company_Peo…).
How does Gilead foster an inclusive work environment that values diversity? What specific programs and initiatives are in place to promote inclusion, and how does Gilead measure the success of these diversity initiatives?
Gilead fosters an inclusive work environment through Employee Resource Groups (ERGs) and diversity initiatives aimed at professional development and community engagement. The company measures the success of its inclusion efforts through employee feedback, participation in diversity programs, and performance management processes that now include “inclusion” as a core value(Gilead_2016_Company_Peo…).
Considering Gilead's Employee Stock Purchase Program (ESPP), how do the company's policies encourage employee investment in Gilead? What benefits do employees gain from participating in the ESPP, and how does it contribute to their overall financial well-being?
Gilead’s Employee Stock Purchase Program (ESPP) encourages investment by offering U.S. employees the ability to contribute 1-15% of their pay to purchase Gilead stock at a 15% discount. This program helps employees build financial security and aligns their interests with the company's success, contributing to overall financial well-being(Gilead_2016_Company_Peo…).
What role does volunteerism play within Gilead's corporate culture, and how does the company facilitate employee engagement in community service initiatives? Additionally, how does participation in these programs impact employee satisfaction and retention rates?
Volunteerism is integral to Gilead’s corporate culture, with the company supporting employee involvement in community service through its Gilead Volunteer Community. These activities align with Gilead’s mission and values, and participation positively impacts employee satisfaction and retention by fostering a sense of purpose and community engagement(Gilead_2016_Company_Peo…).
How does Gilead ensure that its benefits package remains competitive within the biotechnology industry? What strategies does Gilead employ to regularly assess and enhance its offerings to meet the evolving needs of its workforce?
Gilead ensures its benefits package remains competitive by regularly reviewing and benchmarking against industry standards. The company adjusts offerings to meet evolving employee needs, particularly in areas like health and wellness, retirement plans, and work-life balance, ensuring that its benefits are both market-competitive and supportive of long-term employee well-being(Gilead_2016_Company_Peo…).
For employees seeking more information about Gilead's benefits and retirement options, what are the best channels to contact Gilead? How does Gilead ensure that employees have access to clear and timely information regarding their benefits, and what resources are available to assist them during the retirement process?
Employees seeking more information about Gilead’s benefits and retirement options can access resources through the company’s HR portals, internal communication channels, or by contacting HR directly. Gilead provides clear, timely information and offers comprehensive resources such as retirement planning consultations and financial wellness programs to assist employees during the retirement process(Gilead_2016_Company_Peo…).
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