GRITS, GRATS, and GRUTS present tax savings opportunities

Article Abstract:

Transfer tax consequences caused by valuation uncertainties can be avoided or reduced using Grantor Retained Income Trusts, Grantor Retained Annuity Trusts and Grantor Retained Unitrusts. They all transfer remainder interests with little or no gift tax consequences, providing significant transfer tax savings. Term interest in the trust is retained by the grantor while the beneficiaries receive the remainder. However, the later two do not decrease in value for transfer tax purposes through a contingent reversionary interest and only some of the transferred property's value will be included in the estate.

Management, Financial planning, Trusts and trustees, Trustees, Trusts (Law)

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GRATs, GRUTs, and GRITs after the final regulations

Article Abstract:

Few transfer tax avoidance methods are useful planning tools for family members because of IRC section 2702 zero value rules for intrafamily transfers. The most effective transfer tax avoidance is through a grantor retained income trust (GRIT) involving a personal residence whether it is the principal residence or a vacation home. There are several House GRITs that avoid zero value rules for intrafamily transfers. The other planning techniques require that the trust has adequate income to meet all promised payments over the term as well as a considerable growth rate.

Estate planning

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GRATs, GRUTs, and GRITs after the final regulations

Article Abstract:

Grantor Retained Annuity Trusts and Grantor Retained Unitrusts remain useful tax planning tools after the final regulations under IRC Section 2702 because of transfer tax savings and other advantages but can only be applied in specific situations. The transfer of S corporation assets to family members can use these trusts because it throws off considerable income and is easily valued. The final regulations change the valuation rules through a zero value general rule. Specific valuation techniques and exceptions are included.

Laws, regulations and rules, Valuation, Annuities

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