Grantor Retained Income Trust

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Grantor Retained Income Trust (GRIT)

A tax-saving trust in which a grantor transfers property to a beneficiary, but receives income until termination, at which time the beneficiary begins receiving the income.

Grantor Retained Income Trust

A trust in which the grantor places some assets for the beneficiary, but retains the right to receive income from those assets up to a certain point, at which time the beneficiary begins to receive the income. This allows the beneficiary to receive income from the trust without being subject to the estate tax. A disadvantage is the possibility that the grantor will die before the expiration of the trust, which results in the assets transferring to the grantor's estate. In that case, the beneficiary does not receive anything. It is also called a grantor retained annuity trust.
References in periodicals archive ?
Single stock can lend itself to this strategy because rolling short-term GRATs take advantage of investments' volatility to transfer wealth.
If the GRAT holds interests in closely held passthrough entities that make tax distributions to the entities' owners, the distribution should be treated as having been made to the GRAT and then transferred by the GRAT to the grantor.
For purposes of GRATs and CLATs, the relevant interest rate is the interest rate promulgated under [section]7520 of the Internal Revenue Code, as amended.
If the capitalization rate of the S Corp stock is substantially greater than the AFR, a GRAT would produce a lower gift tax than the GRIT.
The total portion of the GRAT includible in D's estate is the sum of the base amount and the additional corpus for years 4 and 5.
Taxpayers normally use GRATs to transfer to others property that they expect to appreciate in value.
When the GRAT terminates, the remainder interest is transferred to the ILIT.
A contingent reversion provision can be inserted in the GRAT or GRUT, which will return the gift property to the transferor's estate if he dies during the trust term.
Rowe and the GRAT under these new 10b5-1 plans, beginning in September 2004, is approximately 225,000, or about 10 percent of Dr.
In a "zeroed out" GRAT, the annual annuity payments are set so high that the trust assets will be depleted before the expiration of the trust's term; see Rev.