For high net worth individuals, passing on wealth to family members is sometimes legally complex. A grantor retained annuity trust (GRAT) is a popular estate planning tool that shifts future assets or growth in assets to family members, minimizing gift taxes and managing other legal consequences. A GRAT allows an individual to receive regular annuity payments over a specified period of years — an annuity term. If that individual dies prior to the term’s expiration, the trust assets are distributed to children, family members or other beneficiaries.
Our team of attorneys has an in-depth understanding of and hands-on experience with both the benefits and drawbacks of GRATs. In particular, we know that every individual has a unique set of financial circumstances. These require using great care and attention to detail when determining the most beneficial estate planning instrument to use to protect the wealth of our clients.
In the case of a client whose circumstances seem to indicate setting up a GRAT, we meet with them to determine the right period of time for a GRAT to be in effect, as well as the value of the annuity payment, in order to insure that the GRAT accomplishes the client’s objectives. We believe that a successful GRAT is one that pays out a significant amount to children or other beneficiaries. In some circumstances, we will help you determine whether the type of GRAT you set up should be a “zero-out” GRAT — one where the gift tax consequences are eliminated. We pride ourselves on being able to help our clients understand their estate planning strategy options and understand how to amplify the wealth they pass on to future generations.