A Grantor Retained Income Trust (GRIT) is an estate planning tool that has been around for many years. He claims his feelings are different, and I do believe him, but can I trust him? The nonvoting interests are then gifted to the less wealthy partner (either outright or in trust). In many cases, it might be advisable for the grantor to create an Irrevocable Life Insurance Trust to own a policy on his or her life to provide the liquidity — both income and estate tax free —to pay the increased estate tax that will be owed if the grantor fails to survive the GRITs term. At the expiration of the fixed term of years, the remaining trust principal is either distributed to the remainder beneficiary (the less wealthy partner) or held in further trust for the benefit of such beneficiary. In contrast, where the remainder beneficiary is a family member, the Internal Revenue Code requires the payout to be a fixed annuity, a so-called Grantor Retained Annuity Trust, or GRAT. The idea is to select a term that will give the present value of the grantors income interest a substantial value (using the IRSs monthly published discount rate), but that the grantor is likely to outlive.