GRAT Remainders

Michael D. Whitty, a partner with the Chicago office of Winston & Strawn, LLP., discusses Repercussions of Walton: Estate Tax Inclusion of GRAT Remainders, Prob. & Prop., May/June 2005, at 13.

Here is Mr. Whitty’s conclusion:

The IRS’s aggressive position asserting total or near-total GRAT inclusion is demonstrably incorrect.  It deserves to be challenged and defeated in the courts soon, so that grantors and planners can implement Walton-type GRATs, knowing that GRAT inclusion will involve only the interest truly retained by the grantor, that is, the annuity payments.  Without any need for a reversion or revocable spousal interest, planners can design GRATs without such provisions and can otherwise plan to minimize the amount includible in the grantor’s estate.