• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Our Firm
    • About Our Firm
    • Attorney and Staff Profiles
  • Services
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Elder Law
    • Coping With Alzheimer’s
    • Emergency Medicaid & Nursing Home Planning
    • Guardianship & Conservatorship
    • Hospice Care
    • Medicaid Planning
    • Veterans Benefits
  • Seminars
  • Areas We Serve
    • Ballwin
    • Chesterfield
    • Clayton
    • Creve Couer
    • Des Peres
    • Edwardsville
    • Fenton
    • Glen Carbon
    • Glendale
    • Kirkwood
    • Maryland Heights
    • Oakland
    • Sappington
    • St. Louis
    • Sunset Hills
    • Valley Park
    • Webster Groves
  • Resources
    • Asset Protection Worksheet
    • Elder Law Resources
      • Chesterfield Elder Law
      • Fenton Elder Law
      • Kirkwood Elder Law
      • Sunset Hills Elder Law
      • St. Louis Elder Law
      • St. Peters Elder Law
      • Webster Groves Elder Law
    • FREE Estate Planning Seminars
    • FREE Estate Planning Worksheet
    • Frequently Asked Questions
      • Estate Planning
      • Families Without an Estate Plan
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Trust Administration & Probate
    • Is Your Estate Plan Outdated?
    • Medicaid Resources
    • Multimedia
    • Newsletters
    • Presentations
    • Pre Consultation Form
    • Probate Checklist
    • Probate Resources
    • Retirement Planning Checklist
    • Special Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning For Niches
      • Trust Administration
  • Reviews
    • Our Reviews
    • Review Us
  • Blog
  • Contact Us

Amen, Gantner & Capriano | Your Estate Matters, L.L.C.

St. Louis Estate Planning & Elder Law Attorneys

Logo
CONNECT WITH US TODAY (314) 966-8077
ATTEND A FREE WEBINAR
Home / Estate Planning / The Grantor Retained Annuity Trust

The Grantor Retained Annuity Trust

December 6, 2010

Estate Planning Tagged With: elder law, Estate Planning, Inheritance Planning

The most elegant solution to any equation is going to be the most efficient one, and being able to satisfy dual objectives through one action is the height of efficiency. There are several estate planning tools that “kill two birds with one stone,” as it were, and one of them is the grantor retained annuity trust or GRAT. The two goals we address here are the reduction of the overall value of your estate to gain estate tax efficiency, and the ability to give a gift to an heir free of the gift tax.

With a GRAT you fund the trust with assets that you would expect to appreciate, and you set a term for the trust which can be any length of time that you choose, either short term or long term. By placing these assets into the irrevocable trust you are removing them from your estate, and this accomplishes one of your two objectives. You name a beneficiary to the trust, and you decide on the amount of the annuity payments you will receive from the trust and how frequently they will be paid.

The original funding of the trust is of course a gift in the eyes of the IRS, and it is subject to the gift tax. Since this gift is comprised of appreciable assets they take this into account, calculating the taxable value of your retained interest using the Section 7520 interest rate. These rates are changed monthly, so the best time to start a GRAT is when they are at their lowest ebb. The strategy here is to use a “zeroed-out” GRAT, and this is when you state in the agreement that your annuity payments over the term of the trust will equal its total value as calculated by the IRS when it was created. If the assets appreciate beyond this estimated value, your beneficiary will receive this remainder free of the gift tax when the trust expires.

  • Author
  • Recent Posts
Paul Gantner
Latest posts by Paul Gantner (see all)
  • The Power in Powers of Appointment - June 15, 2022
  • The Toll of Serving as Fiduciary - June 9, 2022
  • What an In Terrerem Clause Can Do for You - June 1, 2022

Filed Under: Estate Planning Tagged With: elder law, Estate Planning, Inheritance Planning

Other Articles You May Find Useful

The Power in Powers of Appointment
The Toll of Serving as Fiduciary
What an In Terrerem Clause Can Do for You
Business Succession Planning May Be Easier than You Think
Just When You Thought You Understood the 10-Year Rule, Think Again
Application of the Transfer for Value Rule to the Sale of Life Insurance

Primary Sidebar

Download our free Estate Planning Worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.
  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • twitter
  • linkedin
  • youtube

Blog Subscription

  • This field is for validation purposes and should be left unchanged.

Where We Are

Amen, Gantner & Capriano
10733 Sunset Office Drive, Suite 425
St. Louis, MO 63127

See Larger MapGet directions

Office Hours

Monday8:30 AM - 5:00 PM
Tuesday8:30 AM - 5:00 PM
Wednesday8:30 AM - 5:00 PM
Thursday8:30 AM - 5:00 PM
Friday8:30 AM - 12:00 PM

Map

map for Amen, Gantner & Capriano Your Estate Matters office
  • Advantages of Working With Our Firm
  • About The American Academy
  • Disclaimer
  • Privacy Policy
  • Sitemap
  • Contact Us

Footer

Connect to us

  • Facebook
  • twitter
  • linkedin
  • youtube
footer-logo

© 2022 American Academy of Estate Planning Attorneys, Inc.

Amen, Gantner & Capriano,
Your Estate Matters, LLC

Attorney Advertisement