Dec 1, 2005 12:00 PM, By Mark W. Smith, attorney, Holland & Knight LLP, New York

By: By Mark W. Smith, attorney, Holland & Knight LLP, New York

The enactment of Internal Revenue Code Section 2702¹ in 1990 sounded a virtual death knell for the grantor retained income trust (GRIT). The GRIT fell into disuse, so much so that it is often overlooked even in the few circumstances that its use is still tolerated by the IRC.

It's time to revisit the GRIT — particularly because, by applying a little imagination, advisors can use it to the significant advantage of domestic partners, who cannot avail themselves of the unlimited marital deduction from gift and estate taxes. GRIT planning is appropriate for all types of unmarried couples, of course, but it's most needed by same-sex couples for whom federally recognized marriage is not an option.

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