Grantor Retained Annuity Trusts

In a typical GRAT you transfer property to a trust and retain an annuity payment for a fixed term.

Grantor retained annuity trusts. A grantor retained annuity trust GRAT or an installment sale to a grantor trust can be useful in transmitting wealth in a tax-efficient way and often one of these techniques is superior to other estate planning options. 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. Next you retain the right to receive an annuity payment for a.

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. Save Time Money. Wealthy families can use GRATs to freeze the value of their estate while transferring any future appreciation to the next generation free of tax.

A Grantor Retained Annuity Trust GRAT is a gifting strategy that may work well in todays market and interest rate environment. To learn more read our guide on how GRATs work and who theyre for. A common strategy is a grantor retained annuity trust commonly referred to as a GRAT.

The reader should review our basic article Wills and Trusts before reading further. It can also satisfy a grantors desire to retain current assets but give away the growth on those investments. 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.

This type of tax shelter is authorized by law but some regulators consider it abusive. Save Time Money. 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.

Grantor retained annuity trusts GRAT are short-term irrevocable trusts which provide grantors with an annuity and pass on asset income to beneficiaries in a tax-free manner. Grantor retained annuity trusts GRATs are used in estate planning to reduce taxes. 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.