Final Regulations on GRATs

On November 8, the IRS published final regulations on the inclusion amounts for graduated grantor retained annuity trusts in T.D. 9555

The final regulations state that there will be no double inclusion of GRAT interest; instead the inclusion will be based on Section 2036 rules. If a child and parent receive GRAT payments jointly, the parent’s estate will include the amount necessary to produce his or her annuity. The inclusion on the other half of the GRAT will be the amount needed to generate payment to the child, less the child’s payment’s present value. The new regulations also include specific methods and examples for determining valuation.

See Graduated GRAT Final Regs, Crescendo, Nov. 13, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.