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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
It seemed to me, at that time, that they all liked the money they were making drafting wills, GRATS (grantor retained annuity trusts), CRATS (charity remainder annuity trusts), GRITS (grantor retained income trusts), and GRUTS (grantor retained unitrusts) way better than the idea of justice for the wealthy.
2036 alone covers the inclusion and valuation of two types of grantor trusts in a decedent's gross estate: charitable remainder trusts and grantor retained income trusts. Prior to this amendment the IRS had argued that at least some of these trusts might also be covered by Sec.
TECHNIQUES EMPLOYED TO TRANSFER FUTURE APPRECIATION Pages * Installment Sales 50-53, 446 * Private Annuities 50-53, 496 * Gifts 54-61 * Intentionally Defective Trusts 78-81 * Family Limited Partnerships 178-179, 483 * Recapitalizations 182-185 * Family Holding Companies 429 * Grantor Retained Income Trusts (GRITs) 437 * Grantor Retained Annuity Trusts (GRATs) 70-73, 437 * Grantor Retained Unitrusts (GRUTs) 437 * Remainder Interest Transactions (RITs) 516 (1) When an estate freezing technique culminates in the sale of a business interest, or other estate asset, the value represented by that interest is replaced in the estate by either the proceeds of the sale, or the obligation of the purchaser, both of which are estate assets subject to taxation.
The use of Grantor Retained Income Trusts (GRITs), Grantor Retained Annuity Trusts (GRATs) and Grantor Retained Unitrusts (GRUTs) can be used as effective tools in estate planning for S Corp shareholders.
In noncharitable trusts such as grantor retained income trusts (GRITs), grantor retained annuity trusts (GRATs), and grantor retained unitrusts (GRUTs), the period for which the payments may be reserved by the grantor must be for a term determined without reference to the grantor's lifetime.
In 1985, the O'Reillys donated 20 shares of stock in their closely held corporation to various grantor retained income trusts with terms of two to four years.
Affected by Chapter 14 are Buy/Sell Agreements (discussion in footnote 3, page 141), Family Holding Companies (discussion on page 427), Family Limited Partnerships (chart, page 179, and discussion on pages 483-484), Grantor Retained Annuity Trusts (chart, page 71), Grantor Retained Income Trusts (discussion on page 437), Personal Holding Companies (discussion on page 490), Recapitalizations (chart, page 183), and Remainder Interest Transactions (discussion on page 516).
* Common-law grantor retained income trusts (GRITS).
One of the remaining techniques that has been increasingly popular involves personal residences that are expected to appreciate in value and grantor retained income trusts; this technique can generate significant estate tax savings.
It not only covered the perceived abuse areas, but included many more estate planning techniques such as grantor retained income trusts (GRITs), joint purchases and buy-sell agreements.
Some techniques that still work after the implementation of Chapter 14 include private annuities (which never had broad appeal but do have beneficial uses in certain situations J), grantor retained income trusts for personal residences, tangible property trusts and grantor retained annuity and unitrusts.
Qualified personal residence grantor retained income trusts (residence GRITs) are perhaps the most universally applicable and attractive gift planning device currently available for clients.