Define: Grantor Retained Unitrust

A GRUT is a type of irrevocable trust in which the grantor transfers assets to the trust and retains the right to receive annual payments from the trust for a specified period of time.

Unlike other types of trusts, a GRUT allows the grantor to receive annual payments from the trust based on a fixed percentage of the trust’s assets, rather than a fixed dollar amount.

The grantor may be subject to gift tax when transferring assets to the GRUT, and the trust itself may be subject to income tax on any earnings it generates.

No, once a GRUT has been established, the terms are irrevocable and cannot be changed.

After the specified period of time has passed, the remaining assets in the GRUT are distributed to the designated beneficiaries.

Yes, the grantor can retain the right to receive annual payments from the GRUT as a beneficiary.

If the grantor dies before the specified period of time has passed, the remaining assets in the GRUT are included in the grantor’s estate for estate tax purposes.

There are no specific restrictions on the types of assets that can be transferred to a GRUT, but it is important to consider the potential tax implications of transferring certain types of assets.

Yes, a GRUT can be used as part of an estate planning strategy to transfer assets to beneficiaries while retaining the right to receive annual payments from the trust.

Some potential benefits of establishing a GRUT include reducing estate tax liability, providing for the grantor’s financial needs, and transferring assets to beneficiaries.