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Sunday, August 21, 2005

Don't Forget the GRIT!

Previously, the Grantor Retained Income Trust ("GRIT") was a popular device among estate planners to shift appreciation to the next generation at a reduced transfer tax cost. The special valuation rules of Chapter 14 of the Internal Revenue Code (§2701-2704) were enacted in 1990 by lawmakers seeking to curtail the use of GRITs as well as other similar transfer devices.

In a recent article, Mark Smith reminds us that the GRIT is still viable as an effective estate planning technique for gifts to extended family members (such as a niece or nephew), same-sex partners (whether or not married), and unrelated donees. Remembering the GRIT: Smart Planning for a Diverse Clientele, Estate Planning Journal, Sep 2005.

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