Grantor Annuity Trust

A Grantor Retained Annuity Trust is great for those who have estates or plan to have estates valued greater than the current and expected estate tax exemption amount.

Grantor annuity trust. A Grantor Retained Annuity Trust GRAT is a compelling tax-efficient strategy individuals and families can use to transfer wealth to their beneficiaries. A GRAT is an estate planning technique whereby an individual creates an irrevocable trust and transfers assets to that irrevocable trust in order to benefit his or her children or other beneficiaries and in return retains an annuity interest for a number of years. The income tax treatment of annuities is provided for under Code 72.

Wealthy families can use GRATs to freeze the value of their estate while transferring any future appreciation to the next generation free of tax. Grantor Retained Annuity Trust GRAT The primary goal of certain trust instruments is to legally transfer assets to the next generation or your designated heirs at your death or before with reduced or no estate tax. A GRAT is a type of trust that consists of two distinct terms.

A Grantor Retained Annuity Trust GRAT is a gifting strategy that may work well in todays market and interest rate environment. A GRAT is a trust in which the principal is repaid as an annuity to the grantor the maker of the trust with interest typically over multiple years. Save Time Money.

Tiffany Lam-Balfour Jul 14 2021. GRATs generally have a duration of between two to three years and their annuity payments are calculated based on the IRS hurdle rate or the 7520 rate the market yield on government-issued debt. During the GRAT term the grantor is the only beneficiary of the trust and the annuity.

These are in effect estate freeze techniques. Grantor retained annuity trusts GRATs represent an opportunity for a client to transfer appreciating assets to the next generation with little to no gift or estate tax consequences. Ad Protect your family and property.

It can also satisfy a grantors desire to retain current assets but give away the growth on those investments. A grantor retained annuity trust or GRAT can help you transfer wealth to heirs while reducing your tax liability. A Grantor Retained Annuity Trust or GRAT is a commonly used estate planning technique that allows families to transfer wealth to their children with little or no gift tax consequences.