U.S. House Passes Legislation That Would Modify Grantor Retained Annuity Trust (GRAT) Rules

On March 24, 2010, the U.S. House of Representatives passed H.R. 4849—known as the Small Business and Infrastructure Jobs Tax Act. The bill was sponsored by Rep. Sander M. Levin (D-Mich.) and is characterized as legislation that seeks to strengthen the American economy, assist small businesses and create jobs. However, seemingly unrelated to these goals, H.R. 4849 also would modify the Grantor Retained Annuity Trust (GRAT) rules contained in section 2702 of the Internal Revenue Code.

If passed by the U.S. Senate in its present form and enacted into law, section 307 of H.R. 4849 would add the following additional GRAT requirements, which would apply to transfers made after the date of the law's enactment: