Grantor Retained Annuity Trusts (GRATs)

A Means To Make Substantial Tax-Exempt Gifts

Each taxpayer has a $1 million lifetime exemption from the federal gift tax. However, your exemption may be insufficient if you have a large estate and want to transfer property to your family or to trusts substantially in excess of $1 million. A grantor retained annuity trust (GRAT) may, in the right circumstances, give you the opportunity to make these transfers without the imposition of a gift or estate tax.

Schedule a consultation with the attorneys at Quinlivan & Hughes, P.A., to see if a GRAT can benefit you. We have helped numerous individuals in St. Cloud and throughout Central Minnesota in all manner of estate planning considerations. We are experienced and personable, and will help determine if a GRAT is a sound means to protect your assets from taxes.

What Is A GRAT And Why Should I Establish One?

A GRAT is based upon the concept that the ownership of property may be separated into a current time period, during which you retain the right to receive payments on it, and a future time period, when ownership of the property is ceded after the GRAT annuity term ends. The fair market value of the property is calculated and split into two: the interest you retain, and the future interest your family members will retain. That future interest percentage is the gift that will be charged against your $1 million gift tax exclusion. Your gift may be a small percentage of the value of the property you transferred to your GRAT.

You should consider a GRAT if you have property that you expect to appreciate significantly, or property that produces large amounts of cash annually, which can be used to pay the annuity amount during the annuity term.

Determine If A GRAT Can Benefit You

Establishing an effective GRAT is not a straightforward process. It requires detailed planning geared to your particular circumstances. We can help. To speak with one of our attorneys, call Quinlivan & Hughes, P.A., at 320-200-4928. You can also contact us online.