Recently, there has been a surge in Grantor Retained Annuity Trusts (GRATs) as part of an estate plan (the trust pays an annuity to the grantor for a fixed term and thereafter pays the trust balance to the remaindermen). What are the benefits and detriments of using this type of trust?
A) Benefits include the possibility of passing on assets to heirs with little or no gift tax.
B) The grantor receives an annuity, which can provide an income stream.
C) GRATs can be risky if the trust's assets underperform.
D) All of the above.