• 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    • Is Your Estate Plan Outdated?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 Plan / How to Transfer Appreciable Assets at a Discount

How to Transfer Appreciable Assets at a Discount

January 27, 2016

Estate Plan

How to Transfer Appreciable Assets If you are fortunate enough to have accrued an estate that is significantly valuable you likely already know that careful estate planning is crucial. Passing down the assets in your estate without losing a significant portion of the value of those assets is the challenge. For anyone with valuable estate assets, knowing how to transfer appreciable assets at a discount is one key to a successful estate plan. One commonly used estate planning tool for accomplishing just that is the Grantor Retained Annuity Trust, or GRAT. Because a GRAT is a complex type of trust it is imperative that you consult with your Missouri estate planning attorney to decide if a GRAT is right for your purposes; however, understanding the basic concept of a GRAT is a good place to start.

As you undoubtedly already know, the combined value of the assets owned by you at the time of your death and the value of any gifts made during your lifetime is potentially subject to federal gift and estate tax. Each taxpayer is entitled to exempt up to the lifetime exemption limit which was permanently set at $5 million in the American Taxpayer Relief Act of 2012. The lifetime limit is adjusted each year for inflation, making it $5.45 million for 2016. The value of estate assets that exceed the lifetime limit are taxed at a rate of 40 percent, giving taxpayers ample incentive to use all available tools to limit their gift and estate tax exposure. For assets that are likely to appreciate, such as real property or securities, a GRAT is often the answer.

A GRAT is a specialized type of trust that works as follows. As the Grantor, you create the trust for a specific term and fund it with highly appreciable assets, naming a beneficiary who will receive the remainder of the assets at the end of the trust term. Typically, the beneficiary is an adult child or grandchild. Because the trust contemplates a remainder, the IRS determines the taxable value of the trust by adding the hurdle rate to account for anticipated interest accrual. You will then receive annual annuity payments from the trust. The goal is to “zero out” the GRAT, leaving nothing of the taxable value of the trust in the trust at the end of the trust term. Assuming that the trust assets appreciate at a higher rate than the IRS calculated, there will be a remainder in the trust at the trust termination. That remainder will be transferred to the beneficiary tax-free.

One risk, however, with a GRAT is that the Grantor of the trust must outlive the trust term for the strategy to work. If the Grantor dies before the end of the trust term the entire value of the trust assets become part of the Grantor’s estate and are, therefore, taxable.

If you have additional questions or concerns about a GRAT, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.

 

 

  • Author
  • Recent Posts
Charlie Amen
Latest posts by Charlie Amen (see all)
  • What’s Retirement Got to Do with it? - January 19, 2023
  • Refresh and Reset: Syncing up in San Diego - January 12, 2023
  • Estate Planning Reduces Stress During High Anxiety Times - December 16, 2021

Filed Under: Estate Plan

Other Articles You May Find Useful

What Components Do You Need in Your Estate Plan?
Amen, Gantner & Capriano | Your Estate Matters, L.L.C.
Life Events that Should Trigger an Estate Plan Update
Amen, Gantner & Capriano | Your Estate Matters, L.L.C.
Celebrity Lessons – Could Whitney Houston’s Estate Plan Have Protected Bobbi Kristina?

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

© 2023 American Academy of Estate Planning Attorneys, Inc.

Amen, Gantner & Capriano,
Your Estate Matters, LLC

Attorney Advertisement