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 ?
38 CRTs, GRATs, and QPRTs are statutorily sanctioned trusts under the I.
111) GRITs, and for that matter GRATs and GRUTs, divide interests in property into a present interest and a future interest.
When considering a GRAT strategy, we first calculate the core capital and then quantify how much wealth to put into GRATs to move the desired amount of excess capital to the next generation over a certain time horizon.
Because of these advantages, the increased use of life is likely to rise substantially subsequent of new restrictions on short-term GRATs.
To prevent this short term hedging and planning that circumvents estate and gift tax, congress has tried to push through legislation that would make the GRAT trust less desirable and less effective, such as requiring a 10-year term or that there be trust remainder (not all principal returned to the settlor).
Qualified personal residence trusts (QPRTs) are similar to GRATs in some ways.
In general, to qualify for a GRAT, there must be a fixed annuity amount paid at least annually without the possibility of commutation or payment via a note.
Grantor created a GRAT with an annuity of $1,000 ($12,000 annual) payable at the end of each month to Grantor for 10 years, with remainder to Grantor's child.
A further three per cet cut i coucil grats to all volutary orgaisatios ad charities.
Techniques such as GRITs (grantor retained income trusts), GRATs (grantor retained annuity trusts), and GRUTs (grantor retained unitrusts) can result in hundreds of thousands and even millions of dollars of estate transfer cost savings as well as significant income tax advantages.
GRATs or qualified personal residence trusts, "QPRTs"), lead trusts can be created either while the donor is alive (i.
GRATs (grantor retained annuity trusts) and GRUTs (grantor retained unitrusts) are based on the fact that gift tax liability is measured by the property's value at the moment the gift becomes complete.