Grantor Retained Annuity Trust (GRAT)

A Grantor Retained Annuity Trust (GRAT) is an irrevocable trust that pays the grantor a fixed annuity for the life of the trust. After that period, the remainder interest is payed to a noncharitable beneficiary, such as a niece, nephew, or child. This trust is funded partially or wholly by property of the grantor and they retain a fixed annuity for the life of the trust. These trusts are most commonly used with middle aged persons who want to transfer real estate to a family member.

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