Grantor Retained Annuity Trust

Grantor Retained Annuity Trust

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Grantor Retained Annuity Trust

Grantor Retained Annuity Trust definition:  Grantor retained annuity trust (GRAT) is an irrevocable trust that pays a fixed dollar amount (annuity payment) to the grantor for a fixed number of years. When the trust expires during the grantor’s lifetime, the remainder goes to beneficiaries without being subject to gift or estate taxes. If however the grantor dies before the trust expires, the trust is included in the grantor’s estate and may be subject to taxes.  The grantor is responsible for income taxes for the trust.

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