West Virginia Granter Retained Income Trust with Division into Trusts for Issue after Term of Years is a specialized legal arrangement that allows individuals to transfer assets into a trust while still maintaining an income stream from those assets. With the division into trusts for issue after a specified term of years, this type of trust provides a unique planning opportunity for granters. In West Virginia, there are several types of Granter Retained Income Trusts (Grits) depending on the specific goals and objectives of the granter: 1. Standard West Virginia GRIT: This is the most common form of GRIT where the granter transfers assets into the trust while retaining the right to receive income payments for a specified number of years. At the end of the term, the trust assets are distributed to the beneficiaries. 2. West Virginia Term GRIT: This variant of the GRIT allows the granter to establish multiple trusts based on different terms of years. For example, a 10-year GRIT can be set up to benefit one child, and a separate 15-year GRIT can be established for another child. This provides flexibility in tailoring the income stream and distribution terms for each beneficiary. 3. West Virginia Dynasty GRIT: A Dynasty GRIT is designed to transfer assets to multiple generations, beyond the granter's children. This perpetual trust can extend for multiple lifetimes, allowing beneficiaries to receive income distributions for an extended period while preserving the assets and their growth potential within the trust. 4. West Virginia Charitable GRIT: Granters who wish to combine charitable giving with income retention can establish a Charitable GRIT. This type of trust permits the granter to receive income for a specified term and then direct the remaining assets to be distributed to a nominated charity or charities of their choice. By utilizing a West Virginia Granter Retained Income Trust with Division into Trusts for Issue after Term of Years, individuals can enjoy the benefits of income retention, potential tax savings, and asset protection while planning for the future. It is advisable to consult with an experienced estate planning attorney to determine the most suitable type of GRIT based on individual circumstances and objectives.
West Virginia Grantor Retained Income Trust with Division into Trusts for Issue after Term of Years
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Since a GRAT represents an incomplete gift, it is not a suitable vehicle to use in a generation-skipping transfer (GST), as the value of the skipped gift is not determined until the end of the trust term.
If the trust was divided into fractional shares, the trust allocation is updated by recalculating the fraction each time distributions are made, as well as each time income is allocated to principal.
You must agree with all of the other trustees when making trust decisions. So it's worth understanding who they are and deciding if you think the relationship will work.
Grantor Retained Income Trust, Definition A grantor retained income trust allows the person who creates the trust to transfer assets to it while still being able to receive net income from trust assets. The grantor maintains this right for a fixed number of years.
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 term partition is usually applied to a division of assets between the life tenant and the remaindermen beneficiaries (thus bringing the trust to an end). It can also refer to splitting a trust into separate funds, which then operate independently under new trusts (and may have different beneficiaries and trustees).
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.
But assets in an irrevocable trust generally don't get a step up in basis. Instead, the grantor's taxable gains are passed on to heirs when the assets are sold. Revocable trusts, like assets held outside a trust, do get a step up in basis so that any gains are based on the asset's value when the grantor dies.
The creator of the trust (the Grantor) transfers assets to the GRAT while retaining the right to receive fixed annuity payments, payable at least annually, for a specified term of years. After the expiration of the term, the Grantor will no longer receive any further benefits from the GRAT.
Death of the GrantorA revocable trust turns into an irrevocable trust when the grantor of the trust dies. Typically, the grantor is also the trustee and the first beneficiary of the trust.