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.
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