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Simple English definitions for legal terms

grantor-retained trust

Read a random definition: in publica custodia

A quick definition of grantor-retained trust:

A grantor-retained trust is a special type of trust that helps wealthy people reduce the amount of taxes they have to pay when they pass away. The person who creates the trust (called the grantor) gets some money from the trust for a certain number of years, and then the property in the trust goes to someone else without having to pay estate taxes. This type of trust is usually made with things that will grow in value a lot, so that the value of the trust goes up without having to pay taxes on it. There are three different kinds of grantor-retained trusts: annuity trusts, unitrusts, and income trusts.

A more thorough explanation:

A grantor-retained trust is a type of irrevocable trust that is created to reduce estate taxes. It is mostly used by wealthy individuals to limit estate and gift taxes. The grantor receives some form of income from the trust for a set amount of years, and then the property is transferred to a beneficiary free of estate taxes.

There are three main types of grantor-retained trusts:

  • Grantor-Retained Annuity Trusts (GRATs): With a GRAT, the grantor receives a fixed annuity payment from the trust for a set number of years. At the end of the term, the remaining assets in the trust are transferred to the beneficiary.
  • Grantor-Retained Unitrusts (GRUTs): With a GRUT, the grantor receives a percentage of the trust's value each year for a set number of years. At the end of the term, the remaining assets in the trust are transferred to the beneficiary.
  • Grantor-Retained Income Trusts (GRITs): With a GRIT, the grantor receives all of the income generated by the trust for a set number of years. At the end of the term, the remaining assets in the trust are transferred to the beneficiary.

For example, let's say a wealthy individual creates a GRAT and funds it with $1 million worth of stock. The grantor receives a fixed annuity payment of $50,000 per year for 10 years. At the end of the term, any remaining stock in the trust is transferred to the beneficiary free of estate taxes. If the stock has grown in value during the 10-year term, the beneficiary will receive the appreciated value tax-free.

In this way, grantor-retained trusts allow wealthy individuals to transfer assets to their beneficiaries while minimizing estate and gift taxes.

grantor-retained income trust | grantor-retained unitrust

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Dkk
19:42
SEO is big money
2016 pushed the conservative party into populism irreversibly
Dkk
19:43
Maybe, but if this is populism, then every election is populist.
19:43
@Dkk: yeah register 1 website and every swinging tom dick and harry calls/emails/texts to 'help with seo'. like bruh, if YOU found it, what i am doing is working
Dkk
19:43
Indeed!
19:48
wasp, i think people are hopeful for a gov who at least attempts to care about the common man
MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
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