In a grantor-retained annuity trust (GRAT):
A) the grantor could put company stock in an irrevocable trust lasting for up to 10 years.
B) the grantor retains the voting power and interest income from the stock in the trust.
C) the company stock transfers to the beneficiaries at the end of the trust and is taxed at its discounted present value.
D) All of the above

Question

Quizplus · Accepted Answer

All of the statements are correct. A GRAT allows the grantor to transfer company stock into an irrevocable trust for a fixed term of up to 10 years while retaining the right to receive an annuity payment from the trust. The grantor also retains the power to vote the stock and receive any interest income generated by the trust. At the end of the trust term, the remaining assets pass to the beneficiaries. The value of the gift is based on the discounted present value of the assets transferred, which can result in significant estate and gift tax savings.

In a Grantor-Retained Annuity Trust (GRAT)