Estate

Question 1

Grantor Retained Annuity Trust (GRAT)

Answer 1

• fixed % of initial contributions paid out for a term of years
• transfer future appreciation out of estate without gift/estate tax consequences
• if grantor doesn’t within trust term, the FMV of trust property is brought back into gross estate

Question 2

Grantor Retained Unitrust (GRUT)

Answer 2

• fixed % of current value of trust assets
• need to revalue assets annually

Question 3

Qualified Personal Residence Trust (QPRT)

Answer 3

• basically same as a GRAT; instead of income stream, grantor retains ability to use property (house)

Question 4

Tangible Personal Property Trust (TPPT)

Answer 4

• basically same as GRAT; instead of income stream, grantor gets to use property (ex: artworks, antiques, etc.)

Question 5

Dynasty Trust

Answer 5

• long periods of time
• used to avoid transfer tax at death of each generation
• used in states without rules against perpetuities

Question 6

Grantor Trust

Answer 6

• income taxed to grantor
• “intentionally defective trust”

Question 7

2503b Trust

Answer 7

• may hold assets for beneficiary’s lifetime but must pay out income annually

Question 8

2503c Trust

Answer 8

• allows income to be accumulated but assets must be available to child when they turn 21

Question 9

Totten Trust

Answer 9

• not a trust
• POD accounts (beneficiary designations)

Question 10

Blind Trust

Answer 10

• revocable trust used when self management might be a conflict of interest (ex. politician)