One way to reduce taxes tomorrow is to 'freeze' assets today. In this article, the author explains two ways to freeze assets that have interested his key clients. In addition, these techniques allow for the sale of large amounts of needed additional life insurance. Effective strategies to freeze assets include the gifting or selling of assets to "grantor trusts." Both techniques freeze assets at today's values, but they take different forms and lead to different consequences. With a grantor-retained annuity trust (GRAT), clients can gift and transfer income-producing assets to an irrevocable trust, receiving a stream of income from the annuity for the term of the trust. If clients and their advisors are willing to be more aggressive, they might consider a tactic not specifically spelled...
Proposed regulations under Sections 2036 and 2039 provide guidance on the portion of a trust that is properly includible in the grantor's gross estate if the grantor has retained the use of property in a trust or the right to an annuity, unitrust, or other income payment from such a trust for life, or any period not ascertainable without reference to a grantor's death, or for a period that does not in fact end before the grantor's death. A public hearing is scheduled for September 26, 2007.
Estate planning Estate planners have new options for intra-family shifting of wealth. Recent estate tax changes make the grantor retained income trust (GRIT) no longer a good vehicle. The grantor retained annuity trust (GRANT) and grantor retained unitrust (GRUNT) meet similar estate planning needs. GRANTs make it possible to shift potential income and appreciation on trust assets without recognition for gift or estate tax purposes, while still keeping a fixed annuity interest. GRUNTs are similar but with a variable annuity interest.
Estate planning The qualified personal residence trust (QPRT) remains as a method of estate tax reduction. A form of grantor retained income trust, the QPRT involves transferring the title of a house to a trustee for a fixed period of time, at the end of which the beneficiaries assume possession. The tax benefits arise from the value of the house being set at time of transfer, with appreciation not accruing to the estate of the transferor. Sale of the property or the death of the transferor prior to the end of the QPRT lessens the trust's value.
... . Decedent transferred to an irrevocable trust for the benefit of his children (and if they died ... transferred by inter vivos gift, if he retained for his lifetime "(1) the . . . enjoyment of . . ..... . enjoy . . . the income therefrom." The Commissioner claimed that decedent... power is said to be tantamount to a grantor-trustee's power to accumulate income in the trust,...
provides a change of location for a public hearing on REG-119097-05, providing guidance on the portion of a trust properly includible in a grantor's gross estate under Sections 2036 and 2039 if the grantor has retained the use of property in a trust or the gift to annuity, unitrust, or other income payment from such trust for life, for any period not ascertainble without reference to the grantor's death, or for a period that does not in fact end before the grantor's death.
... with the treatment of the grantor of a trust as the owner of a portion of the trust because he has retained an interest in the income from that portion. For c...
Grantor retained annuity trust, grantor retained unitrust The grantor retained annuity trust and grantor retained unitrust (GRTs) provide income from transferred property, an annuity or a portion of the trust, removing any appreciation from the grantors estate. GRTs also discount the property entrusted by the amount of interest retained and gift taxes are paid from the gross estate. Moreover, lower interest rates decrease the value of the gift, but higher rates decrease potential estate tax liability.
Qualified personal residence trust Persons with homes in a qualified personal residence trust (QPRT) may find it worthwhile to purchase the home back from the trust prior to the end of the trust's term. The QPRT offers benefits in transfer taxes, but property repurchase and conversion to a grantor retained annuity trust offers income tax benefits. The IRS may disallow this process if the transferor's clear intent is to repurchase.
... * * * * * * * * * *. Income beneficiary of trust liable for gift tax resulting... tax purposes, the income beneficiary of a grantor retained income trust (GRIT) received a gift when ...
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