A grantor retained annuity trust (GRAT) is an irrevocable grantor trust you can use to make large financial gifts to your loved ones while also minimizing gift tax liability. These financial gifts remove future appreciation from your estate, reducing the amount that will be subject to estate tax at your death. However, gift tax liability could apply. In this case, the trust creator would pay at the onset. You create a GRAT and then fund it with accounts and property. People expect these to appreciate over the GRAT’s term. Then, you receive a fixed annuity payment, based on the trust’s original value, for a specified time. Once the period ends, the court transfers the remainder of the trust’s accounts and property to your named beneficiary.
Tag Archives: Types of Trusts
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Sep
Sep
Lawyers create testamentary trusts in a will. They write this type of trust upon the individual’s death. Therefore, they do so to protect the money and property on behalf of a beneficiary.
Estate Attorney, Estate Planning, Estates, Inheritance, Trusts, Uncategorized, Wills
10 Types of Trusts
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Sep
Sep
A generation-skipping trusts allows you to distribute your money and property to your grandchildren, or even to later generations, without taxation, by using your lifetime exemption to offset any tax that could be due.