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Publication Title

Tax Notes (a publicaion of Tax Analysts)

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At the beginning of June, the Treasury Department issued proposed regulations providing guidance regarding the portion of a trust that is included in the grantor’s gross estate for federal estate tax purposes when, among other circumstances, the grantor has retained the right to annuity or unitrust payments that last for the grantor’s life, a period not ascertainable without reference to the grantor’s death or a period that does not, in fact, end before the grantor’s death.

Primarily, those trusts are charitable remainder annuity trusts (CRATs) or unitrusts (CRUTs), described in section 664(d) of the Internal Revenue Code of 1986 as amended, and grantor retained annuity trusts (GRATs) or unitrusts (GRUTs), described in reg. section 25.2702-3.

The proposed regulations state that they also will apply to qualified personal residence trusts (QPRTs), described in reg. section 25.2702-5(c), and other forms of grantor retained income trusts (GRITs).