Florida Estate Planning Lawyer Blog

Given that many GRATS are now underwater and will not likely recover.

Grantor can purchase assets, acknowledge that the GRAT will fail and create a new GRAT with the assets.

If the GRAT contains an annuity payment and the grantor believes that that the underlining asset will still preform over the term of the GRAT, the annuity payments can be taken and new GRATs can be formed with these payments.

There is a potential that the the Code will be reformed and that a 10% remainder will be required. For those concerned about this forming a long term GRAT, at this time, may be a hedge against this risk.

A GRAT or Grantor Retained Annuity Trust is an estate planning technique that minimizes the tax liability existing when transfers of estate assets occur. Under a GRAT, an irrevocable trust is created for a certain term or period of time. The individual establishing the trust pays the taxes associated with income and the transfers. As long as the individual outlives the term of the GRAT then the assets that are transferred go to the beneficiary free of Estate taxes.

GRAT's are typically used with high net worth individual who want to reduce the amount of estate taxes their estate will be subject to.

If you have questions on Grantor Retained Annuity Trusts, Contact a Florida Estate Planning Lawyer to discuss your objectives.