What does Preamble of GRATS Act do?

This bill proposes to amend the Internal Revenue Code of 1986. The proposed amendment concerns rules for grantor trusts.

What does SHORT TITLE. of GRATS Act do?

This bill is formally titled the Getting Rid of Abusive Trust Schemes Act

What does REQUIRED MINIMUM 15-YEAR TERM, ETC., FOR GRANTOR RETAINED of GRATS Act do?

This section amends section 2702 of the Internal Revenue Code of 1986 regarding grantor retained annuity trusts. It redesignates existing paragraphs within section 2702 and moves them. It establishes additional requirements for grantor retained annuity trusts to be treated as described in paragraph (1)(A). These requirements include a minimum term of 15 years and a maximum term of the annuitant's life expectancy plus 10 years for receiving fixed amounts. The fixed amounts must not decrease annually during the specified term. The remainder interest must have a value between 25% and 100% of the fair market value of the transferred property, with a minimum value of $500,000. The amendments apply to trusts created on or after the date of enactment of this Act. They also apply to contributions made on or after the enactment date to trusts established before that date.

What does CERTAIN TRANSFERS BETWEEN GRANTOR TRUST AND DEEMED OWNER. of GRATS Act do?

This section amends the Internal Revenue Code of 1986 regarding transfers between a grantor trust and its deemed owner. Transfers of property for consideration between a trust and its deemed owner are treated as sales or exchanges. Exceptions apply to fully revocable grantor trusts, asset-backed securities trusts, and trusts excluded by the Secretary. The section defines 'asset-backed securities trust' and 'deemed owner' for its purposes. Amendments apply to transfers made after the date of the enactment of this Act.

What does PAYMENT OF TAX ON INCOME OF GRANTOR TRUST. of GRATS Act do?

This section amends Section 2503 of the Internal Revenue Code of 1986 to address the payment of tax on the income of grantor trusts. It establishes that taxes paid on the income of an applicable grantor trust by a deemed owner are treated as a taxable gift. An 'applicable grantor trust' is defined as a trust where the taxpayer is considered an owner under subpart E of part I of subchapter J of chapter 1 and which is not fully revocable by the taxpayer. Reimbursements made by the grantor trust to the deemed owner during the calendar year are not subject to this gift tax treatment. The taxable gift is deemed to occur on December 31 of the calendar year, the day before the deemed owner's death, or when the deemed owner renounces reimbursement rights. Sections 2522 and 2523 of the Internal Revenue Code are amended to deny deductions for payments treated as gifts under the new Section 2503(d). The amendments apply to trusts created on or after the date of enactment of this Act.

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GRATS Act

Last updated: 4/14/2026 · Introduced: 4/14/2026

Author: Ron Wyden (D-OR)

TL;DR (AI)

The bill establishes a minimum term of 15 years and a maximum term of the annuitant's life expectancy plus 10 years for grantor retained annuity trusts to be treated as described in paragraph (1)(A) of section 2702 of the Internal Revenue Code of 1986.
Transfers of property for consideration between a grantor trust and its deemed owner are treated as sales or exchanges, with exceptions applying to fully revocable grantor trusts, asset-backed securities trusts, and trusts excluded by the Secretary.
Taxes paid on the income of an applicable grantor trust by a deemed owner are treated as a taxable gift, with reimbursements made by the grantor trust to the deemed owner during the calendar year not subject to this gift tax treatment.

119th Congressin committeeOfficial page

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Other Sections

Includes provisions on preamble, short title., and 3 more.

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