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Tampa Estate Planning > Tampa Trust Attorney > Grantor Retained Annuity Trusts (GRATs)

Tampa Grantor Retained Annuity Trusts Attorney

Tampa GRAT Attorneys

If you have a sizeable estate, you may be concerned about the future estate tax your family could face. As mutual funds, stocks, and other investments begin to gain higher and higher economic value, your current estate could grow substantially in the coming years. After your death, your family may have to pay estate tax if your estate is valued over a certain amount. In 2015, the estate tax exemption is set at $5.43 million. This means that in 2015, if a decedent’s estate exceeds that value, his or her family will pay substantial taxes on the estate. There is no way of knowing what the future exemption rate will be, so it is a good idea to plan your estate now. You could save large amounts in estate and gift taxes by creating a Grantor Retained Annuity Trust.

How Does a GRAT Work?

Once you have created your GRAT, you will donate assets into the trust. Since the GRAT is an irrevocable trust, this amount will be excluded from your estate. The trust document will establish a term, which is the period of time you will receive an annuity. The annuity amount will also be defined in the trust document. You beneficiaries will take ownership of the trust assets after the term expires. A GRAT can help you reduce your estate, and thus your estate tax. Additionally, your trust gift will be valued at a discounted rate for gift tax purposes.

Providing for Beneficiaries

Another type of trust, called the Grantor Retained Income Trust (GRIT), has a similar structure of the GRAT. The GRIT is also an irrevocable trust that allows the grantor to receive some income from the trust for a specified term. However, a GRIT heavily restricts who you can name as your beneficiary. A major benefit of the GRAT is the ability to name close relatives as your beneficiary.

With a GRAT, you can select your children, grandchildren, or other close relatives (or friends) as the final beneficiaries. Like most trusts, your GRAT can provide you and your family peace of mind about their financial future once you are gone. When you create your GRAT, you know that your beneficiary will receive the trust assets minus your annuities. Your trustee can even grow the trust by selling or investing assets before the trust term expires. Doing so can increase the final gift amount.

Creating a GRAT can also help ease any familial conflict regarding your estate. With this type of trust, your beneficiary knows that he or she will receive the trust gift at the end of the term, instead of worrying about an undefined portion of your estate. Providing clarity of your intentions through a trust document can put everyone at ease. Such clarification can help your family deal with financial matters after your death.

Call Tampa Trusts Attorney Today

Making a trust is not a simple matter. There are numerous tax and trust laws involved, and you will want the written trust to include specific language drafted for your benefit. An experienced estate planning lawyer like David Toback can create a trust that best suits your needs. If you live in the Tampa area and are interested in finding out more about GRATs or any type of trusts, contact David Toback today.

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