GRITs created under prior law offer unique opportunity

Article Abstract:

The grantor retained income trust (GRIT) now has valuable estate freezing potential thanks to the Revenue Reconciliation Act of 1989's repeal of IRC Section 2036(c). Specifically, estate planners can create and fund a GRIT for a principal residence. This residence is then sold to the grantor and trust assets are converted into other growth investments. The grantor can use the residence as the basis for a new qualified personal residence trust. Grantors can thus acquire the estate and gift tax leverage of traditional GRITs.

Estate freezing

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The impact of taxes on the value of close corporations

Article Abstract:

The valuation of a close corporation should be reduced to account for the tax cost of selling the corporation's assets, when these assets are investments rather than an active business. This follows IRS regulation 20.2031-2, according to which the value of a business is the net amount a buyer would pay a seller when neither is under any compulsion to buy or sell and both know the pertinent facts. With the repeal of the General Utilities doctrine, this discount to a corporation's value is reasonable.

Close corporations, Valuation, Closely held corporations

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Using GRITs to make risk-free gifts of appreciated property

Article Abstract:

GRITs can allow estate planners to reduce basis step-up losses for their clients who want to transfer highly appreciated property as gifts. Planners and their clients should always consider GRITs before such transfers because they can substantially decrease the estate tax implications. The protection from GRITs is potentially risk-free.

United States, Gift tax

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