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New Trust Rules: Stricter Requirements for GRATs and Taxable Transfers

This Act significantly modifies rules for certain trusts, particularly Grantor Retained Annuity Trusts (GRATs), to curb their use in avoiding estate and gift taxes. Citizens using these wealth planning tools face stricter requirements regarding the minimum trust term and remainder value. Furthermore, transfers between a trust and its deemed owner will now be treated as taxable sales, and the owner's payment of the trust's income tax will be considered a taxable gift.
Key points
GRATs must have a minimum term of 15 years, and the remainder interest (what goes to beneficiaries) must be at least 25% of the transferred property's value or $500,000.
Property transfers for consideration between a trust and its 'deemed owner' will be treated as taxable sales or exchanges, preventing tax-free asset movement.
If the trust owner pays the income tax for a non-fully revocable trust, that payment is treated as a taxable gift, unless the trust reimburses the owner.
These changes apply to trusts created or funded with new contributions on or after the date the law is enacted.
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Additional Information
Print number: 118_S_3988
Sponsor: Sen. Wyden, Ron [D-OR]
Process start date: 2024-03-20
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OFFICIAL LEGAL TITLE

GRATS Act

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 118_S_3988.

Which chamber initiated this legislation?

This legislation was initiated in the Senate.

When did the legislative process begin?

The process officially started on 2024-03-20.

What are the main provisions?

Key points include:

  • GRATs must have a minimum term of 15 years, and the remainder interest (what goes to beneficiaries) must be at least 25% of the transferred property's value or $500,000.
  • Property transfers for consideration between a trust and its 'deemed owner' will be treated as taxable sales or exchanges, preventing tax-free asset movement.
  • If the trust owner pays the income tax for a non-fully revocable trust, that payment is treated as a taxable gift, unless the trust reimburses the owner.
  • These changes apply to trusts created or funded with new contributions on or after the date the law is enacted.
What is the specific legal status?

The current status is Expired.

Where can I read the full text of this legislation?

The full official text is available at: View full text

Who is the primary sponsor?

The primary sponsor is Sen. Wyden, Ron [D-OR].

What is the latest detailed status?

The latest detailed status is: Introduced in Senate

Is this summary verified?

Yes. This content was analyzed by AI and verified by the Lustra Judge System on 2025-12-26.

CATEGORIES

Taxes Courts and Law Economy