Grantor Retained Annuity Trust (GRAT) & Retained Unitrust (GRUT)

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GRATs and GRUTs have much in common with the qualified personal residence trust. The main difference is that a GRAT or GRUT lets you transfer any asset (not just your home) out of your taxable estate. And, with a GRAT or GRUT, you receive an income, instead of continuing to live in your home, for a set number of years.

When you set up a GRAT or GRUT, you transfer an income-producing asset (like a family business, stocks or real estate) into an irrevocable trust for a set number of years. During this time, the trust pays you an income.

If the income you receive is a set dollar amount and does not fluctuate each year, the trust is a GRAT (Grantor Retained Annuity Trust). If the income is a percentage of the trust assets and the amount of income you receive fluctuates each year, the trust is a GRUT (Grantor Retained UniTrust).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kevin L. Von Tungeln, Thompson | Von Tungeln, A P.C. | Attorney Advertising

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