Under a GRAT
, a donor typically has an independent valuation done of the shares of a business or other assets and transfers the property to a trust.
2036, a GRAT
was properly included in the estate of a decedent.
For the last several congressional sessions, Senator Bernie Sanders has introduced his "Responsible Estate Tax Act" that would return the wealth exemption to $3.5 million and close some of the most egregious loopholes, such the GRAT
38 CRTs, GRATs
, and QPRTs are statutorily sanctioned trusts under the I.R.C.
For example, if a 65-year-old business owner had transferred $1 million of his company stock to a GRAT
in March 2009 and retained the right to receive 4 percent, or $40,000, per year for 10 years, that retained right to income would have been worth $351,900.
(111) GRITs, and for that matter GRATs
and GRUTs, divide interests in property into a present interest and a future interest.
Section 2702 of the Code authorizes the creation of a "grantor retained annuity trust", or "GRAT
practitioners have been using stock options and GRATs
as techniques for
are popular wealth-transfer tools that can be used independently, but are often employed to provide funding for exit strategies from premium financing and split-dollar life insurance arrangements.
Single stock can lend itself to this strategy because rolling short-term GRATs
take advantage of investments' volatility to transfer wealth.
Given the likelihood of a two-year extension of the Bush tax cuts, Congress and the Administration will have to look elsewhere, among them GRATs
, to help close the federal budget deficit.
Grantor retained annuity trusts (GRATs
) may help reduce your taxable estate, if you anticipate having a large estate--and a potentially large estate tax obligation.