Grantor-retained Income Trust (grit)
Irrevocable trust into which the grantor places assets and retains the income from or the use of these assets for a stipulated period of time. At the termination of this time period, the principal (assets) of the trust is transferred to the grantor's non charitable beneficiary. The non charitable beneficiary may include individual (s) such as a grandchild, niece, nephew, son, or daughter. Should the grantor survive the stipulated period of time, he or she will incur substantial savings in estate and gift taxes. In order for these savings in taxes to occur, the following requirements must be met by the grantor:
- income to the grantor must be the sole result of the income generated by assets held in the trust.
- any income generated by the assets held in the trust can be paid only to the grantor of the trust.
- neither the grantor nor the spouse of the grantor can act as a trustee of the trust.
- any income retained by the grantor must be for a period of time not to exceed 10 years.
Popular Insurance Terms
Transfer of highly individualized loss exposures that is not based on the usual pooling principles of insurance such as risk identification and classification selection. Rather than setting ...
Maximum age of an applicant or insured beyond which an insurance company will not initially underwrite a risk or continue to insure it. For example, under some forms of renewable term life ...
Deferred annuity under which one premium payment is made and the annuity is paid up (no further premium payments are required). ...
Methods by which a home office underwriter chooses applicants that an insurer will accept. The underwriter's job is to spread the costs equitably among members of the group to be insured. ...
Section providing protection in four areas: Coverage A (Home) the structure of the home (basic contract amount). Other property coverages in Section I are expressed as a percentage of ...
Fund in a segregated account to provide for the return of unearned premiums on policies that are canceled. ...
Federal statute defining the federal tax code, covering such topics as credits against tax; business-related credits; computing credit for investment in certain depreciable property; ...
Financial instruments whose principal and income are not established in advance according to contractual terms set forth in the financial instruments document. Both the principal and income ...
Clause in an insurance policy that provides for the payment of a monetary sum to the individual (s) who incurred the loss. ...
Have a question or comment?
We're here to help.