These are sometimes referred to as “noncharitable” trusts because the money or property held by the trust will not be given to a charity. Once the grantor (person who created the trust) passes away, all remaining property in the trust will be distributed to the beneficiaries chosen by the grantor. Since these types of trusts can be a bit complicated to understand, you’ll definitely need the help of your Peachtree City estate planning attorney to properly create and maintain one. You can always count on your lawyer to contact you should the IRS revise the various requirements tied to using this tax-saving estate planning tool. Here's a broad overview of how irrevocable, grantor -retained trusts like GRATs, GRUTs, and GRITs are designed to work.              

                                                        Basic Facts Regarding Irrevocable GRATs, GRUTs & GRITs

  • A GRAT is a grantor-retained annuity trust that provides a fixed amount of money (an annuity) to a designated individual for a fixed number of years. When the person receiving the annuity dies, the remainder of the trust is transferred to one or more previously designated beneficiaries;
  • A GRUT is a grantor-retained unitrust. This type of trust entitles its creator to receive an amount of money equal to a fixed percentage of the fair market value (FMV) of the trust based on annual calculations. This investment device is also referred to as a variable annuity trust – which means the designated recipient will be receiving different amounts of money from this trust each year;
  • A GRIT is a grantor-retained income trust specially designed for the wealthiest individuals. This investment vehicle (or tax shelter) requires you to transfer property into a trust for a set time period. During this trust’s tenure, the person who created it (the grantor) will receive a qualified annuity interest – also referred to as a unitrust interest. When this trust ends, all of its assets are distributed to the named beneficiaries.

Since all of these non-charitable trusts are complicated vehicles for letting wealthy people avoid paying higher taxes, is important to carefully monitor the status of these trusts with your Peachtree City estate planning attorney.  Should the IRS regulations governing these types of trusts change, you’ll then need to decide if you should seek out more advantageous investment opportunities.

To obtain help with satisfying all of your Georgia estate planning needs, please contact Shane Smith Law today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (980) 246-2656.