Estate Planning Attorney Explains the Grantor Retained Annuity Trust

A Temecula Estate Planning Attorney is very important when disusing the utilization of the “GRAT”. Given the typical high price of both gift taxes as well as inheritance tax, the grantor retained annuity trust, or GRAT, has actually come to be a popular estate planning alternative over recent years. Although the regulations for a GRAT are intricate and ever-changing, the fundamental idea is straightforward enough to comprehend.

Why Use Steve Bliss as Your “GRAT”
Temecula Estate Planning Attorney

A GRAT, like other trust funds, begins with a grantor that has to choose a trustee and also mark both beneficiaries to receive the benefits of the trust, as well as assets to money the count on. Unlike some other sorts of trust funds, however, a GRAT also requires the grantor to determine when the trust fund will terminate. A GRAT should be developed for a details number of years. At the end of the specific life of the trust, the possessions staying in the trust fund will be moved to the recipients. In addition to making a decision the period of the trust, the grantor has to decide how much to get into the annual kept annuity rate of interest payments. Likewise unlike various other counts on, a GRAT pays the grantor back a yearly annuity repayment annually as a taken care of quantity or as a percentage of the overall count on assets. A variety of aspects enter into getting one of the most out of a GRAT.

Using a Temecula Estate Planning Attorney for Trust Administration

When created properly, a GRAT can assist avoid the payment of both present as well as inheritance tax. One key variable to take into account is that the grantor should make it through the trust fund. If the grantor passes away prior to the count on duration ends, all count on possessions are returned to the grantor’s estate and all tax obligation benefits are shed. Although there is no chance to assure that you will survive the trust administration, knowing this danger ahead of time could assist you choose a count on duration. Another essential factor to consider when developing a GRAT is what properties to use to fund the depend on.

Although the policies connecting to GRAT assets are complicated, they can be summed up as follows. The Internal Revenue Service sets the “assumed price of return” each month. When a property executes above the collection thought the price of return, the additional incomes can be transferred to beneficiaries tax-free. On top of that, any type of gift taxes due on the properties moved to the recipients are figured out by deducting the present value of the maintained annuity from the worth of the assets added to the GRAT.


The Law Firm Of Steven F. Bliss, Esq.
43920 Margarita Rd Ste F, Temecula, CA 92592
(951) 223-7000

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Given the complicated nature of a GRAT, consultation with your Temecula estate planning attorney is recommended to establish if a GRAT is right for you.