Use GRATS to Transfer An S Corp. to the Kids

The grantor retained annuity trust (GRAT), statutorily allowed by Congress since 1990, can transfer part or all of a wealthy person's business to the next generation, free of gift tax, and in a way that removes the business from estate taxation. A GRAT with a business interest is created by a grantor transferring a portion of his interest into an irrevocable trust and retaining the right to an annuity

The grantor retained annuity trust (GRAT), statutorily allowed by Congress since 1990, can transfer part or all of a wealthy person's business to the next generation, free of gift tax, and in a way that removes the business from estate taxation.

A GRAT with a business interest is created by a grantor transferring a portion of his interest into an irrevocable trust and retaining the right to an annuity interest (a qualified interest) for a fixed term of years.1 When the fixe

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