S. 3988 — GRATS Act

This bill imposes new requirements on grantor retained annuity trusts (GRATs) to discourage tax avoidance schemes by wealthy taxpayers. Specifically, such trusts must have a minimum term of 15 years and a maximum term of the life expectancy of the annuitant plus 10 years. The bill also prohibits any decrease in a GRAT during its term and requires that the remainder interests in such trusts at the time of their transfer must have a minimum value for gift tax purposes.  The bill also treats a transfer of property between a GRAT and its deemed owner as a sale or exchange for income tax purposes, with specified exceptions. The bill designates any income tax paid on the income of a GRAT as a gi...