Commonly paired with an installment sale: the grantor sells an appreciating asset to the IDGT in exchange for a promissory note. Growth above the note's interest rate passes to heirs outside the estate.
Glossary · trusts
Intentionally Defective Grantor Trust
Acronym: IDGT
In plain English
A trust that is outside your estate for estate-tax purposes but still yours for income-tax purposes — so you keep paying the trust's income tax, which effectively grows the trust tax-free for heirs.