Grantor Retained Income Trust

(redirected from Grantor-Retained Annuity Trust)

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 ?
The grantor-retained annuity trust (GRAT) is a wealth transfer vehicle that receives its initial funding from the grantor and transfers annuity payments to the grantor's personal portfolio each year.
The grantor-retained annuity trust (GRAT) is the Dirty Harry of estate and gift planning.
Three such tools are the private annuity, grantor-retained annuity trust (GRAT), and the preferred stock recapitalization.
In 1990, Congress added chapter 14 to the IRC, which created three statutory irrevocable trusts: the grantor-retained annuity trust (GRAT), the grantor-retained unitrust (GRUT) and the QPRT.
But Sanders, an independent from Vermont who teams up with the Democrats in the Senate, did shine a spotlight on what has been a powerful estate planning technique: the grantor-retained annuity trust.
One situation in which this may inadvertently result is when a parent contributes stock of a company he wants to pass on to his children to a grantor-retained annuity trust (GRAT).
Self-financing works extremely well when established with a grantor-retained annuity trust as an exit strategy.
If a grantor-retained annuity trust is used, and there is a spousal interest in the event the grantor dies during the trust term, this will presumably have to meet the QDT rules to accomplish the desired result.
Rowe also established a grantor-retained annuity trust ("GRAT") in September 2003 and transferred Aetna stock options into that trust.
Rowe also has established a grantor-retained annuity trust and has transferred certain Aetna securities into the trust to enable his children to benefit from any future appreciation in the Aetna stock price.
Short-term grantor-retained annuity trusts (GRATs) or qualified personal residence trusts (QPRTs) whose terms end before the Act's sunset provisions will still be an effective planning technique for very high net-worth clients.
Amid pressure to close the yawning federal budget gap, congress is mulling over several bills that would significantly narrow the advantages of using grantor-retained annuity trusts (GRATs) to avoid estate and gift taxes.
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