GRAT Legislation Update

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This week, the Senate considered the House’s version of the Small Business Jobs Tax Relief Act of 2010. Going into the hearings, there was considerable speculation that the Senate was going to pass its bill with the GRAT restrictions in place, meaning the minimum term for GRATs would be 10 years, and the remainder interests of any GRATs would have to have a value greater than zero.

The speculation was incorrect. The Senate’s version of the House Bill currently does not contain the GRAT restrictions, so for now, short term GRATs remain a viable technique. The House bill and the Senate version of the bill will ultimately have to reconciled. It is unclear whether the GRAT restrictions will be included. Thus, if you are planning to implement a short term GRAT, it is advisable to do it as soon as possible due to the uncertainty of the legislation.

We will continue to advise you on GRAT legislation as it happens.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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