Grantor Retained Annuity Trust

A Grantor Retained Annuity Trust (GRAT) is a tax advantaged estate planning tool that uses an annuity to facilitate the transfer of assets to future generations while minimizing tax expenses. Specifically, a Grantor Retained Annuity Trust is used to minimize gift taxes. With a GRAT, the donor or grantor sets up a trust for a definite term and then transfers assets into the trust. The grantor receives an income stream through annuity payments from the trust over the fixed term or retention period. When the retention period is over, the assets are passed on to the beneficiaries but the value of the gift is reduced by the amount of the annuity payments made to the grantor.

Notes from the CFA Institute Fixed Income Conference

The CFA Institute just held its 2012 fixed income conference in San Francisco.

Speakers shared a very broad range of perspectives on fixed income issues over the course of about a dozen sessions.

Session notes and observations (in no particular order) include:

Demographics and Deleveraging -- Rick Rieder, Blackrock

The Best Idea in Light of Demographic and Fiscal Challenges -- Scott Simon, PIMCO


Grantor Retained Annuity Trusts at Risk

The status of grantor retained annuity trusts ("GRAT") is uncertain as a result of a bill that was recently passed by the House of Representatives. According to Investment News, "the Small Business and Infrastructure Jobs Tax Act of 2010 would impose a 10 year minimum for estate planning vehicles and would bar "zeroed-out" GRATS." Grantor retained annuity trusts are very efficient estate planning tools. A person using a GRAT would first place some assets in a trust. That person then takes back...
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