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ARTICLE · 06 DECEMBER 2010

Limitations on GRATs May Be Close

McGuireWoods LLP
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Our update of March 29, 2010, summarized the usefulness of Grantor Retained Annuity Trusts (GRATs) in estate planning, and reported action by the House of Representatives to limit that usefulness by requiring all GRATs to have a minimum term of 10 years.

United StatesTax
Ronald Aucutt
Ronald Aucutt
Dennis Belcher
Dennis Belcher
W. Birch Douglass, III
W. Birch Douglass, III
Charles Fox, IV
Charles Fox, IV

Our update of March 29, 2010, summarized the usefulness of Grantor Retained Annuity Trusts (GRATs) in estate planning, and reported action by the House of Representatives to limit that usefulness by requiring all GRATs to have a minimum term of 10 years. That House action went nowhere in the Senate, but the idea is still around. It's likely to be seriously considered in the current flurry of "Lame Duck" congressional activity. It will be a part of the package the Senate is expected to vote on tomorrow, and although the Senate is not likely to approve the package, this is just one step in what is likely to become an animated dance over the next couple of weeks.

Today's lesson, as in our March update, is that if it makes sense to create a GRAT, it shouldn't be put off. So far, any legislation that restricts GRATs is proposed to take effect when President Obama signs it, but that effective date could be moved earlier as Congress strives to find revenue from any

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