A wealthy individual has set up a GRAT. Should he die during the time the trust is active, how are the remaining assets in the trust taxed?
A) The original value plus any appreciation passes to the beneficiaries, but is subject to gift tax.
B) The original value plus any appreciation passes to the beneficiaries and is taxed as ordinary income.
C) No tax is due if the grantor should die during the term of the trust.
D) The original value plus any appreciation is taxed as part of the grantor's estate.
Answer: D) The original value plus any appreciation is taxed as part of the grantor's estate.