GRATs in Estate Planning Under Current Tax Law

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

Note: CPE credit is not offered on this program

A live 90-minute CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Tuesday, February 22, 2022

1:00pm-2:30pm EST, 10:00am-11:30am PST

Early Registration Discount Deadline, Friday, January 28, 2022

or call 1-800-926-7926

This CLE 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 the pandemic, federal interest rates and specific asset values remain low, creating 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 low-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 low 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 low 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

Howard-Potter, Erica
Erica Howard-Potter

Partner
Schnader Harrison Segal & Lewis

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

Attend on February 22

Early Discount (through 01/28/22)

Cannot Attend February 22?

Early Discount (through 01/28/22)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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