Single stock can lend itself to this strategy because rolling short-term GRATs
take advantage of investments' volatility to transfer wealth.
It does not provide a full discussion of the significant tax, financial or legal issues associated with the structure or implementation of a GRAT
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.
Another (more common) example would be contributing pre-IPO stock to a GRAT
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.