Grantor Retained Annuity Trust (grat)
Definition of "Grantor retained annuity trust (grat)"
Irrevocable trust into which the grantor places assets and receives in turn a fixed amount of income from a fixed annuity (amount of income stipulated at the time the trust is established) for either a given number of years, or for the lesser of a given number of years, or until the grantor's death. When the term of the trust expires, assets in the trust to include any appreciation are distributed to the named remainder beneficiary (s). If the assets in the trust fail to generate sufficient income to make the required annuity payments, the principal of the asset on deposit in the trust must be liquidated in an amount needed to meet the required income payments. This principal could diminish dramatically by the time it is transferred to the remainder beneficiary (s). If the grantor is alive when the trust terminates, the assets and their appreciation within the trust are not included in the grantor's estate.
Popular Insurance Terms
Top state regulator of the insurance business who is either elected to office or appointed by a state to safeguard the interests of policyowners. ...
Retirement center with a focus on group living arrangements for senior citizens. The center has separate apartments for each resident as well as an on-site nursing facility. Generally, ...
Coverage provided for individuals or businesses for loss due to forgery or alteration of such financial instruments as notes, checks, drafts, and promissory notes. ...
Federal tax imposed on the estate of a decedent according to the value of that estate. The first step in the computation of the federal estate tax owed is to determine the value of the ...
Futures contracts based on automobile and health reinsurance policies to be traded on the Commodity Future Exchange of the Chicago Board of Trade. The purpose is to allow insurance ...
Policy that allows premium payments to vary, within certain limits, at the option of the policyholder. In return, the death benefit and rate of cash value accumulation vary with the premium ...
Financial instruments whose principal and income are established in advance according to contractual terms set forth in the financial instrument's document. Examples of such investments ...
Underwriting phrase denoting the best judgment based on the experience of an underwriter, in classifying a particular risk. ...
Coverage under a commercial workers compensation policy for situations in which an employee not covered under workers compensation laws could sue for injuries suffered under common law ...
Have a question or comment?
We're here to help.