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Tax Partner Douglas L. Siegler commented on the possibility that Congress will significantly narrow the advantages of using grantor-retained annuity trusts (GRATs) to avoid estate and gift taxes. Currently, taxpayers commonly structure GRATs with a short duration, usually two to three years. The proposed tax change before Congress would extend the minimum period to 10 years. Doug noted that the longer required term "opens up the possibility that the value of the property in the GRAT will experience one or more material decreases during the GRAT term, thereby reducing or eliminating the value of the property remaining at the end of the term."
June 21, 2010 National Underwriter Life & Health