(G)RATS! Part Deux
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"Another acronym?" I hear you ask. "What is a GRAT again, and why are you still talking about them?" Is it a bug?  No, it's not a gnat. Is it something dirty? No, it's not grit (although I'm sure there is an estate planning mechanism with that acronym as well). In a prior post I discussed the various aspects of GRATs, or Grantor Retained Annuity Trusts. In this post I cover the stated term of the trust, and what that term should be: - The trust term can be as long as the Grantor's life, or for a specified term of years, or for the shorter of either period. The term must be set and fixed at the creation of the trust in the trust document. A specified term of years is most common. - Because of the risk that a Grantor might die during the term, a shorter term can be used. However, a longer term can sometimes be beneficial, as when the section 7520 interest rate--used to value certain charitable interests in trusts--is expected to increase during the longer term. Successive short-term GRATs can also be used.

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