Set up a GRAT now and sidestep proposed estate-planning crackdown

by on
in Small Business Tax,Small Business Tax Deduction Strategies

New legislation working its way through Congress could put a halt to a popular estate-planning technique. The crackdown limits the ability to avoid gift tax on transfers to a grantor annuity trust (GRAT). In particular, the proposed legislation no longer allows taxpayers to "zero out" a GRAT. 

Strategy: When appropriate, set up a GRAT now. If Congress approves the new tax bill, it's likely the changes will take effect on the date of enactment.   

Furthermore, the current economic conditions are favorable for GRATs.

Here's the whole story: With a GRAT, you (the "grantor") generally transfer a business interest to an irrevocable trust while retaining the right to receive fixed annuity payments for a term of years. At the end of the term, the remaining assets are distributed to the beneficiaries, usually the grantor’s children. Therefore, the assets are removed from your taxable estate.

When the GRAT is created, you're treated ...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment