Grantor Retained Annuity Trusts: Tax-Efficient Estate Planning Techniques

A GRAT is an effective vehicle to transfer assets and property that will likely appreciate in value to heirs. When set up correctly, these trusts afford their grantors reduced tax liability for gifts to children, while the underlying assets continue to grow in value.

When the trust term ends, the remainder interest passes to the grantor’s children. So long as the grantor survives the GRAT term, the amount that passes to the children is not subject to estate tax.

Although the grantor survivorship requirement suggests GRAT terms of short duration—often just two years, recent trends favor longer-term GRATs that allow the trust to lock in current low interest rates or values. Current low interest rates make GRATs particularly advantageous at this time.

Listen as our panel of experienced estate planning attorneys discusses best practices for maximizing the benefits of GRATs.

1. Structuring GRATs
   1. Regulatory and statutory requirements
   2. Impact of low interest rates
   3. Threat of statutory changes
2. Tax consequences for GRATs
   1. Gift tax implications
   2. Estate tax implications
   3. Generation-skipping transfer tax implications
   4. Income tax implications

The panel will review these and other key issues:

• What are the statutory and regulatory requirements for structuring GRATs?
• How do the current interest rates impact the viability of GRATs?
• What are effective planning approaches for using GRATs?