Grantor
Retained Unitrust (GRUT)
See
Grantor Retained Annuity Trust
(GRAT).
The GRUT is the same type of trust as a GRAT except instead
of an annual payment which is set upon creation of the trust
the payment is specified as a fixed percentage of the value
of the trust assets determined annually. Because of this the
GRUT does not have the same potential for discounted giving.
In a GRAT if the trust assets earn more than the rate of
return used by IRS in determining values, property passes to
the remaindermen free of gift tax. In a GRUT if the trust
earns more than the payout rate the earnings stay in the
trust, increase the value of the trust assets, and increase
the payment the next year, with a consequent lessening of
the remainder value.
NOTE:
There currently is no Federal or state estate tax or
generation skipping tax. The gift tax is still in effect.
Whether or not the estate and generation skipping taxes
will be reinstated this year is not known. Many people
expect that they will be reinstated, but what will happen
is not known. What the rates and exemptions will be
if the taxes are reinstated is also not
known. Click
here for more.
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