Grantor Retained Annuity Trusts (GRATS) - How Beneficial?


The Grantor Retained Annuity Trust (GRAT) is an irrevocable trust that you create. At the end of its life it will transfer the assets remaining in the trust to someone else (normally your children). While the trust is in existence, it pays you a fixed amount each year-an annuity.

The GRAT is a sophisticated way to remove assets from your estate with no or minimal gift tax consequences. It also allows you to enjoy the income from the assets transferred to the GRAT for a predetermined period of time. At the end of that term your children will ultimately receive the gift.

The first question is, how much of the money in the trust isn’t subject to gift tax? Read more...

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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