GRATS Act

This bill, known as the GRATS Act, modifies federal tax law regarding certain types of trusts and wealth transfer strategies, primarily affecting individuals who use these tools for estate planning. It introduces new requirements for Grantor Retained Annuity Trusts (GRATs), mandating a minimum 15-year term, fixed payments that do not decrease, and a minimum value for the portion gifted to beneficiaries. The bill also changes how transactions between a grantor trust and its deemed owner are treated, making them taxable sales rather than being disregarded for income tax purposes. Additionally, it specifies that if an individual pays the income taxes for a non-revocable grantor trust they control and is not reimbursed by the trust, that payment will be considered a taxable gift to the trust's beneficiaries. These changes apply to trusts created or contributions made on or after the bill's enactment.