House Bill Would Limit Use of GRATs

The House Ways and Means Committee reported favorably H.R. 4849, 111th Cong., 2d Sess. (March 17, 2010), a bill that, if enacted, would restrict the use of many favored forms of grantor retained annuity trusts (GRATs). The bill would (a) require that a GRAT have a minimum term of 10 years; (b) require that a GRAT have some minimum remainder interest; and (c) preclude the use of GRATs the annuity amounts of which decrease during the trust term.

The bill, as reported by the Ways and Means Committee, would apply to transfers after the date of enactment.

The Will Doctor Notes: There is a bit of a rush on, to create GRAT’s before the new legislation is passed. For the right client and the right assets, this is, indeed, a good strategy. As to the chances of any legislation on this, or the estate tax, this year, no-one can guess, at present.

Posted in Status of Tax Legislation, WillPlan Blog.

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