A shorter trust term also helps increase the odds that the GRAT
will succeed in lowering overall taxes.
The combination of a PFLP and a GRAT
will generally require a longer term to be used.
It does not provide a full discussion of the significant tax, financial or legal issues associated with the structure or implementation of a GRAT
The short-term GRAT
is, in sum, a very good deal-and, many now argue, too good to last.
6) The effectiveness of the GRAT
as a wealth transferring device is dependent upon: (1) the grantor surviving the trust term (i.
First, a short-term GRAT
minimizes exposure to the risk that the senior family member will die during the term, which, as stated above, would cause all or a portion of the value of the GRAT
assets to be included in the senior family member's gross estate.
, GRUT, or QPRT is effective where income producing property is located in more than one state and unification and probate savings are desired.
If the trust is set up as a GRAT
or a GRUT only the remainder is subject to gift tax without regard to the remainderman's identity.
For many small business clients, a grantor retained annuity trust (GRAT
) can form part of an effective planning strategy--allowing the client to capitalize both on the value of the GRAT
strategy and today's family-business valuation discounts.
The first GRAT
was set up so that the businessman would retain the right to receive an annuity for four years, after which the remaining trust assets, if any, would pass to the children's trust.
By using a rolling short-term GRAT
, you can essentially keep your stock while transferring much of its growth in value to your beneficiaries.
Yet the GRAT
has so far successfully resisted efforts to rein it in.