In a Grantor-Retained Annuity Trust

question 42

Multiple Choice

In a grantor-retained annuity trust:

• A)there is an attempt to minimize taxes on a family by creating two classes of stock-preferred stock,whose value is locked in,and common stock,whose value reflects the market value of the business.
• B)a business owner can pass on up to $10,000 annually,which is exempt from federal gift taxes.
• C)the grantor retains the voting power and interest income from the stock in the trust for up to ten years.
• D)the surviving owner or heir of a family business has the right to purchase the stock of the deceased owner at a price established by a predetermined formula.

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Definitions:

Bias

A tendency to lean in a certain direction, often to the detriment of an open-minded perspective, usually influenced by preconceptions or personal experiences.

Forum Selection Clause

A contractual provision that designates the jurisdiction or the court where any disputes arising under the contract will be resolved.

Contracts

Legally binding agreements between two or more parties that outline terms and conditions under which specified actions are to be completed.

Supreme Court

The highest federal court in the United States, which has the ultimate judicial authority to interpret and decide upon federal laws and constitutional questions.