Grantor Retained Income Trust

(redirected from Grantor-Retained Annuity Trusts)

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 ?
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.
The new Sanders-Harkin-Whitehouse bill also would close several estate tax "loopholes" - as advocated in President Obama's FY 2011 budget proposal, by requiring consistent valuation for transfer and income tax purposes, requiring a 10-year minimum term for grantor-retained annuity trusts, and modifying the rules for valuation discounts.
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.
(19) Certain techniques, like grantor-retained annuity trusts (GRATs), charitable lead annuity trusts (CLATs), and private annuities do better in low interest rate environments, whereas others, most notably, qualified personal residence trusts (QPRTS) and charitable remainder annuity trusts (CRATS) fare worse.
Since IRC section 2702 was enacted, grantor-retained annuity trusts (GRATs) and grantor-retained unitrusts (GRUTs) have become popular succession-planning tools.
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.
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