OMAHA, NE — Legacy Design Strategies has released a new article addressing a question that surfaces constantly in estate planning conversations and is rarely answered clearly: what is a grantor trust, and what does the term actually do?

The firm reports that the phrase turns up in trust paperwork across the Omaha market without explanation, leaving owners uncertain whether something is wrong with their documents. In most cases nothing is. The concern is what people conclude next.

A Reporting Rule, Not a Form of Protection

The term describes how trust income is reported and little else. When the person who created a trust keeps the ability to amend or cancel it, the IRS continues to treat that person as the owner of its contents, and interest, dividends, and rental income remain on that individual's personal return.

Nearly every revocable living trust operates this way, and the arrangement produces no additional tax. Difficulty arises when the label is mistaken for a safeguard against the cost of care.

"The document is usually doing exactly what it was drafted to do. What concerns us is the household that believes a revocable trust has already solved long-term care, because that belief tends to surface at the worst possible moment," said Andrew Sigerson of Legacy Design Strategies.

Why a Revocable Trust Seldom Helps With Care Costs

Because a revocable trust can be undone at will, the assets inside it are generally still treated as available to pay for care. Recording a new deed changes who holds title without changing the underlying calculation.

Certain irrevocable trusts are built differently and may reach a different result. Outcomes depend on how a document was written, when it was funded, and a five-year review of transfers that precedes any application for assistance. Moving property inside that window can postpone eligibility rather than advance it.

A Capital Gains Issue Facing Nebraska Landowners

The article also raises a tax consequence that Omaha-area households holding farmland or long-owned real estate may not anticipate. Inherited property is ordinarily revalued as of the owner's death, clearing decades of accumulated gain before heirs sell.

In 2023 the IRS confirmed that this revaluation generally does not extend to property held in certain irrevocable trusts. Nebraska ground purchased in the 1970s could pass to the next generation carrying its original value, and a later sale could produce a sizeable tax bill. Whether a given trust preserves the revaluation depends on its drafting.

Nebraska, Iowa and North Dakota Do Not Align

Nebraska imposes no state estate tax, but Nebraska counties continue to collect an inheritance tax in 2026, with the amount owed determined by how closely a beneficiary was related to the person who died. A trust may keep an estate out of probate in Nebraska while leaving that tax untouched.

Requirements shift at the state line. Iowa stopped collecting inheritance tax for deaths on or after January 1, 2025, and North Dakota does not collect one. Legacy Design Strategies maintains offices in Omaha, Nebraska; Iowa Falls, Iowa; and Minot, North Dakota, and the article observes that a household with property in more than one of those states answers to more than one set of rules.

Firm Urges Document Review Ahead of a Crisis

The firm's position is that existing paperwork should be read by an attorney rather than assumed to work, particularly for households approaching retirement or already managing a parent's care.

"Two trusts can sit on a shelf looking nearly identical and produce very different results for the same household. Reading the actual document is the only way to know which one someone owns," Sigerson said.

Nebraska residents with questions about what is a grantor trust are encouraged to request a consultation and review their existing documents with counsel.

About Legacy Design Strategies

Legacy Design Strategies is an estate and business planning law firm based in Omaha, Nebraska, with additional offices in Iowa Falls, Iowa, and Minot, North Dakota. The firm's attorneys, including Andrew Sigerson, work with individuals, families, farm and ranch operations, and business owners across the three states. Practice areas include estate planning, elder law and Medicaid planning, trust administration and probate, business succession planning, and farm and ranch planning. The firm emphasizes client education alongside its legal work, and initial consultations are offered on a no-obligation basis.

Contact Information:

Legacy Design Strategies

9859 S 168th Ave
Omaha, NE 68136
United States

Andrew Sigerson
(402) 235-5625
https://ldstrategies.com/