The simplified idea behind a GRAT
trust is that the principal gets returned to the creator of the trust and the growth goes to the (usually younger generation) beneficiaries without any estate or gift tax.
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.
A further three per cet cut i coucil grats
to all volutary orgaisatios ad charities.
Now suppose that Parent decided against the GRAT
option and instead
In addition, the GRAT
will return the executive the initial $100,000 from the trust plus interest at a federal rate determined the month the GRAT
Your heirs receive your net estate after estate taxes and expenses plus the remainder value of the GRAT
Valuation of GRITs, GRATs
and GRUTs for Tax Purposes
Grantor retained annuity trusts (GRATs
): A GRAT
is a split-interest trust in which the grantor retains an annuity interest for a term of years.
Our intensive and advanced education on the big impact and nuances of estate tax exemptions, control issues, and the leverage opportunities of GRATs
, CRUTs, ILITs and QPRTs is part of our daily work.
Besides the scheduled reduction of that exemption, there have been proposals to restrict GRATs
(grantor retained annuity trusts) to a 10-year term.
He liked that if the GRATs
were successful he could pass on assets from his personal portfolio to his children in lieu of the stock itself.
Hesch, Deferred Payment Sales to Grantor Trusts, GRATs
and Net Gifts: Income and Transfer Tax Elements, 24 Tax MgMT.