Grantor Retained Annuity Trusts

A grantor retained annuity trust (GRAT) is used to make large financial gifts in the United States to family members without paying the gift tax. This is a financial instrument that can be set up by a donor by issuing a donation into a trust. This type of trust is set up as an annuity where the donor can obtain payments annually from the trust. It is an estate litigation tool that purposes in minimizing the tax liability that exists when the transfers of estate assets take place. This irrevocable trust is created for a set time. After that time, the trust expires and the beneficiary will receive the tax free assets. Make sure that you are fully equipped with a knowledgeable and trustworthy Los Angeles trust lawyer. Our firm can help you navigate your case and pursue the result that you deserve.

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About Grantor Retained Annuity Trusts

If the trust creator dies before the trust expires, the assets become part of the taxable estate of the individual. As a result, the beneficiary will receive nothing. This method is based on interest rate assumptions. These trusts use assets that earn more than the Internal Revenue Service's (IRS) standard. The grantor retained annuity trust is created by transferring assets to an irrevocable trust for the benefit of the beneficiaries assigned to that trust.

This is a powerful and tax-efficient tool for the transfer of finances that is available. It permits the individual to share the future appreciation of his or her assets with the beneficiaries with nearly no gift tax. The grantor will retain an interest in the trust and each year, the trust will give the grantor what is required. Deciding which type of trust is the most appropriate for the situation depends on many factors.

Work with Our Los Angeles Trust Attorney

For more information on this topic and to find out whether it is the appropriate solution for you and your family, speak with a Los Angeles trust attorney.

Contact the Law Offices of David A. Shapiro, P.C. today if there is an issue with any aspect of the trust.