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Grantor Trusts May Have the Following Characteristics:
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Grantor can derive benefits from the income,
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Grantor may retain the power to revoke the trust,
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Grantor may retain power over beneficial enjoyment,
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Grantor may be able to exercise certain administrative powers over
the trust’s operation, or
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Grantor may retain a reversionary interest in either principal or
income.
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GRITS, GRATS, & GRUTS:
Why does my estate plan sound like
breakfast?
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These are
irrevocable trusts designed to
save on estate tax. There are
several kinds; with all of them, you
keep income from trust property, or
use of that property, for a period
of years. When the trust ends, the
property goes to the final
beneficiaries you've named. These
trusts are for people who have
enough wealth to feel comfortable
giving away a substantial hunk of
property. They come in three
flavors: Grantor-Retained Annuity
Trusts (GRATs), Grantor-Retained
Unitrusts (GRUTs) and
Grantor-Retained Income Trusts (GRITs). |
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A grantor is a person who creates a trust. When a grantor retains
substantial control of a trust, the grantor is taxed on the trust’s
income, and the trust is disregarded for tax purposes.
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If the grantor retains control of
only part of a trust, the grantor is
treated as the owner of only the
assets controlled; income from other
assets is taxed to the trust or its
beneficiaries. |
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