- 4 - died and the spouse received the annuity, distribution of income or principal could not be made to any person other than the spouse during the life of the spouse. Each GRAT was irrevocable except that the grantor retained the right to revoke the successor interest of his or her spouse in the annuity. Each GRAT provided that the grantor intended to create a “qualified interest”, as defined in section 2702(b)(1), and that the provisions of the GRAT document were to be construed in accord with that intent. Each GRAT document further provided that, if the initial fair market value of the assets that were contributed was incorrectly determined, the trustee would either pay to or recover from the grantor or his or her spouse the amount necessary to account for the undervaluation or overvaluation of the assets within a reasonable period after the final Federal tax determination of the correct value. Each GRAT document also prohibited commutation of the annuity interest and additional contributions to the GRAT’s, after the initial funding. Discussion Petitioners assert that the interests in the annuities that were given to each spouse are qualified interests under section 2702 and that the retained interests are single annuities based on two lives, referred to as dual-life annuities. Petitioners contend that the retained interests in the annuities should bePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011