An article on Trusts and Estates magazine's website today refers to a provision in the March 24, 2010 Small Business and Infrastructure Tax Act that puts the hit on GRATS. The law will require that GRATs have a minimum 10 year term, that annuity payments not decline during the first 10 years of the trust, and that a GRAT’s design at inception envisions a remainder (which would basically eliminate the zeroed-out GRAT). The Senate has taken up the bill and T&E believes the Senate will vote on it by Memorial Day. The CBO estimate that this change will generate $4 billion over the next 10 years.
Even though most people aren't rich enough to need GRATS (I say that with the caveat that the future of the federal estate tax is, apparently, unknowable), the proposed changes seem to show a Congress more willing to look at the estates of the wealthy as a source of tax revenue. Expect to see more of this in the future. That means you, $1 million estate tax exemption and 55 percent rate! Get comfortable, you may be staying a while.
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