GRAT Strategies to Minimize Transfer Tax After Tax Reform and Impact of 2026 Sunset Provisions

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, June 18, 2019

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will explain creative grantor retained annuity trust (GRAT) strategies to maximize the amount passing to beneficiaries without paying transfer tax. The panel will discuss determining if a GRAT would benefit you or your client, specific strategies to optimize the GRAT(s) and under what circumstances to implement each approach.

Description

A GRAT allows a grantor to contribute assets to a trust but still receive annuity payments over a specified number of years. In a zeroed-out GRAT, the present value of the annuity payments, calculated using the Section 7520 rate, would equal the value of the assets contributed so that no taxable gift is made. However, many factors influence this simple example. Although a grantor escapes gift and estate tax, he continues to pay income tax on the trust's assets, and GST is still a consideration.

To be effective, the grantor must outlive the term of the annuity and, even better, the investments should out-perform the Section 7520 rate. Aside from these somewhat non-controllable aspects, advisers can take concrete steps to increase the value of the residual passing to beneficiaries.

The federal exemption that is now $11.4 million is scheduled to sunset in 2026 if Congress does not act in the meantime. Tax advisers must be aware of the impact of the sunset on transfer strategies to minimize transfer tax.

Listen as our panel helps discern when a GRAT is an effective estate planning tool and provides examples of ways to increase its value, including substituting investments, graduating annuity payouts, rolling short-term GRATs, 2026 GRATs and more.

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Outline

  1. Benefits of a GRAT strategy
  2. Risks of a GRAT strategy
  3. Specific GRAT strategies
  4. Impact of tax reform on GRATs

Benefits

The panel will explain these and other concepts:

  • Zeroed out GRATs
  • Rolling short-term GRATs
  • Graduated annuity pay-outs
  • Asset substitution
  • 2026's impact on GRATs and GRAT terms

Faculty

Lipoff, Lawrence
Lawrence M. Lipoff, CPA, TEP, CEBS
Director
CohnReznick

With more than 30 years of experience, Mr. Lipoff specializes in the delivery of domestic and international private...  |  Read More

Michaels, Philip
Philip J. Michaels

Partner
Norton Rose Fulbright US

Mr. Michaels is a partner in the New York office focusing on estate and tax planning, including estate and trusts...  |  Read More

Tippett, Scott K.
Scott K. Tippett

Atty
Hagan Barrett

Mr. Tippett's practice focuses on wealth law, as a comprehensive and integrated approach to domestic and...  |  Read More

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