Dictionary of Exit Planning Terms

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Generally Accepted Accounting Principles are accounting standards established by the Financial Accounting Standards Board (FASB).

Going Concern Value

The gross value of the company as an operating business. This value may exceed our be a discount from the liquidating value.


Grantor-Retained Annuity Trust (GRAT)

A grantor-retained annuity trust (GRAT) allows for a business owner to give away trust assets to designated beneficiaries, but keep an income stream from the gifted assets for a period of years. If the assets increase in value during the term of the trust, this appreciation passed to the designated beneficiaries of a dramatically reduced estate and gift tax cost.

A GRAT is in a revocable trust to which a business owner can contribute the stock of his company. the business owner then retains the right to receive a fixed annuity payments from the trust for a specified period of years (typically form 2 to 7 years), based on several factors, including the market value of the asset contributed to the trust, the length of the annuity, and and IRS approved interest rate.

Generation-Skipping Tax

In the United States, the generation-skipping tax is imposed on both out right gifts and transfers and trust to or for the benefit of unrelated persons who are more than 37 1/2 years younger than the donor or to related persons more than one generation younger than the donor, such as grandchildren. The generation-skipping tax will be imposed only if the transfer avoids incurring a gift or estate tax at each generation level.

For property distributed in the years 2011 and 2012, taxpayers are entitled to a $5 million GST tax exemption.


The amount by which the price paid for company exceeds the company's estimated net worth at market value of its underlying assets and liabilities.