Minnesota income tax
Gifts should be leveraged in order to get the biggest bang for your gift tax buck. minnesota income tax Georgia state income tax. Qualified Personal Residence TrustA Qualified Personal Residence Trust (QPRT) is a modified form of a Grantor Retained Income Trust (GRIT). Prior to the Revenue Reconciliation Act of 1990 (RRA ''90), GRITs were very popular estate planning vehicles whereby a person (the grantor) would transfer property to an irrevocable trust and retain the right to receive the income of the trust for a period of years. On the expiration of the trust''s term, the remaining property was then distributed to the trust beneficiaries, typically the grantor''s children. minnesota income tax Georgia state income tax. The initial gift of property to the trust was discounted from the fair market value of the property contributed due to the income interest retained by the grantor. In many cases, the trust property was placed in investments that did not produce income, such as stocks or mutual funds. This had the effect of reducing the income paid to the grantor and increasing the value of the trust property transferred to the remainder beneficiaries. minnesota income tax Virginia state income tax forms. In substance, the grantor received a discount in the value of the gift due to a right to receive income which in reality was never paid. GRITs were effectively eliminated by RRA ''90; however, the transfer of a personal residence into a trust with a retained right to use the residence for a specified term was excepted from the limitations imposed by RRA ''90. The QPRT or "house GRIT" as it is sometimes referred to allows the grantor to transfer a personal residence into a trust, retain the right to use the residence for a specified time period and receive a discounted gift valuation. Depending on the length of the retained interest, the reduction in the value of the gift can be substantial. Assuming that the home appreciates in value during the term of the QPRT, the grantor''s home will be transferred to the remainder beneficiaries at a significantly discounted amount. While it is possible to fund a QPRT with a residence that is currently mortgaged, it is not recommended due to the additional complexities which must be addressed. Grantor Retained Annuity Trust and Grantor Retained UnitrustThe RRA ''90 limitations on the use of GRITs generally provide that any retained interest in a trust must actually be paid out to the grantor. This has led to the creation of the Grantor Retained Annuity Trust (GRAT) and the Grantor Retained Unitrust (GRUT). With a GRAT, the grantor retains the right to an annual payment from the trust for a term of years. The retained annuity reduces the amount of the grantor''s gift. A GRUT is similar except that the retained annuity is expressed as a percentage of the trust property at the beginning of each year during the trust''s term. While GRATs and GRUTs do not achieve the leverage that was available with GRITs prior to RRA ''90, they can still be useful in leveraging gifts of assets that will appreciate at a rate greater than the expected rate of return mandated by the Internal Revenue Service (IRS). Currently (February, 1999), the IRS assumes a 5. 6 percent average rate of return. If the assets gifted to the GRAT or GRUT outperform the rate set by the IRS, the value of the property ultimately transferred to the remainder beneficiaries will exceed the value of the gift calculated for purposes the grantor''s gift tax return. Family Owned EntitiesFamily limited partnerships and other closely held entities have recently gained popularity as vehicles for making gifts at discounted values. The basic technique involves making gifts of minority ownership interests in existing or recently created entities. The value of such gifts is discounted due to such restrictions as lack of marketability and/or lack of control.
Minnesota income tax
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