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GRATs in Estate Planning Under Current Tax Law

Structuring Considerations, Income, Gift, Estate, and Generation-Skipping Transfer Tax Consequences

Recording of a 90-minute CLE/CPE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
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Conducted on Thursday, October 5, 2023

Recorded event now available

or call 1-800-926-7926

This CLE/CPE course will offer a comprehensive guide to structuring grantor retained annuity trusts (GRATs) under current tax law. The panel will go beyond the basics to provide specific drafting tools to avoid potentially costly mistakes and maximize GRATs' benefits. The panel will discuss client circumstances that benefit most from GRATs, tax consequences, and opportunities and challenges in the current economy. The panel will also discuss sample language for relevant clauses such as self-correcting features, asset substitution powers, term selection, and other critical components of a successful GRAT.

Description

A GRAT is an effective vehicle to transfer to heirs assets and property that will likely appreciate. When set up correctly, GRATs allow taxpayers to transfer property to their children at a minimal tax cost and allow the underlying assets to continue to grow in value outside of the taxpayer's estate. Estate planners must leverage the use of GRATs, ascertain essential structuring techniques, and overcome potential tax pitfalls.

Due to federal interest rates and specific asset values, there is an opportunity to maximize the use of GRATs in estate planning. GRATs are irrevocable trusts typically structured with a short term, allowing for the low cost gifting of property expected to appreciate over that term. When the trust term ends, the remainder interest (after the initial value plus interest is paid back to the trust's grantor) passes to the grantor's children. As long as the grantor survives the GRAT term, the amount that passes to the children is out of the grantor's estate and no longer subject to estate tax.

Current interest rates make GRATs particularly advantageous at this time.

Listen as our panel of experienced estate planning attorneys discusses best practices for maximizing the benefits of GRATs.

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Outline

  1. Structuring GRATs
    1. Regulatory and statutory requirements
    2. Impact of interest rates and depressed assets
  2. Tax consequences for GRATs
    1. Gift tax implications
    2. Estate tax implications
    3. Generation-skipping transfer tax implications
    4. Income tax implications

Benefits

The panel will review these and other key issues:

  • What are the statutory and regulatory requirements for structuring GRATs?
  • How do the current interest rates and asset values impact the viability of GRATs?
  • What are effective planning approaches for using GRATs?

Faculty

Mesires Fournaris, Christina
Christina Mesires Fournaris
Partner
Morgan, Lewis & Bockius

Ms. Fournaris advises clients on estate, tax, and generational wealth planning. High-net-worth individuals,...  |  Read More

Mendel, Jennifer
Jennifer A. Mendel
Partner
Barnes & Thornburg

Ms. Mendel has spent the last 15 years honing her craft counseling high net worth families on complex trust, estate and...  |  Read More

Howard-Potter, Erica
Erica Howard-Potter
Partner
Pryor Cashman

Ms. Howard-Potter is a partner in the firm’s Tax and Wealth Management Department. She focuses her practice on...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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