A Senate Bill - S.1286, 112th Cong., 1st Sess. (June 28, 2011) - was introduced by Senator Robert B. Casey (D-Pa.) which would set a minimum term for all grantor retained annuity trusts (GRATs) at 10 years. The bill would also prevent any decreasing annuity payment GRATs during the first 10 years, and would require that the remainder interest have a value greater than zero on the date the trust is created. The bill would make these changes retroactively to all transfers made after December 31, 2010.
Previously, short term GRATs of two years in duration, decreasing term GRATs and so called zero out GRATs were used effectively to save estate taxes.
This bill highlights the fact that we should move diligently to perform estate planning now.