Estate Law Questions? Ask an Estate Lawyer.
A GRAT is deemed to be a grantor trust. Therefore, any income generated or capital gains realized within the GRAT during the GRAT term would be income taxed to the grantor—just as if the asset remained in the grantor's name. This would be the case even in situations where the income tax liability exceeds the annual annuity payable to the grantor.
The grantor should pay it. Who set it up? I would go ask the attorney who helped you set it up?
Was the rental property in NY?
I don't know. I would ask the attorney who set it up.
Did the attorney say it would? I would run it by your accountant. If it is taxed to the grantor, then I would probably apply. Is the trust irrevocable?
it would probably apply.
It says it applies to trustees.
I would suggest that you talk to a New York estate planning attorney or CPA with experience with GRATs. I would suggest going back to the attorney who set it up. They should have the answers to your questions.