Missouri Termination of Grantor Retained Annuity Trust in Favor of Existing Life Insurance Trust
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How to fill out Termination Of Grantor Retained Annuity Trust In Favor Of Existing Life Insurance Trust?
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FAQ
Out GRAT is a GRAT where the annuity payable to the trust's creator is set in a manner that results, mathematically, in a net gift of zero.
If the grantor does not survive the term, the GRAT will fail, but again no assets are lostthey will simply be included in the grantor's taxable estate.
Thus, the trustee cannot terminate the GRAT before expiration of the term of the grantor's qualified interest by distributing to the grantor and the remainder beneficiaries the actuarial value of their term and remainder interests, respectively.
At the end of the initial term retained by the Grantor, if the Grantor is still living, the remainder beneficiaries (or a trust to be administered for the benefit of the remainder beneficiaries) receive $100,0000 plus all capital growth (which is the amount over and above the net income that was paid to the Grantor).
The annuity amount is paid to the grantor during the term of the GRAT, and any property remaining in the trust at the end of the GRAT term passes to the beneficiaries with no further gift tax consequences.
To implement this strategy, you zero out the grantor retained annuity trust by accepting combined payments that are equal to the entire value of the trust, including the anticipated appreciation. In theory, there would be nothing left for the beneficiary if the trust is really zeroed out.
GRATs may provide payments for a term of years or for the life of the Grantor.
When a GRAT is created, you also set the term, or lifetime, of the trust. Once the term expires, the remaining assets transfer to your beneficiaries. However, if you pass away before the term expires, then all assets in the trust revert back to you and are included in your taxable estate.