skip to Main Content
Need Help? Call us today at 1-800-123-45678

A Grantor Retained Annuity Trust Fund, or GRAT for quick, is a special type of irrevocable depend on that permits the Trustmaker/Grantor to gamble versus the probabilities and also, if the Trustmaker/Grantor plays their cards right, after that a substantial amount of wide range can be relocated to the future generation for basically no estate or present tax obligation bucks. For additional information speak to us about estate planning and also various other methods to safeguard you assets and avoid probate in San Marcos.

Just how Does a GRAT Job?
Right here is a basic introduction of just how a GRAT works:

The Grantor/Trustmaker transfers specific ownerships right into the name of the GRAT and also, as the name suggests, preserves the right to obtain a yearly annuity repayment for a specific selection of years. When the regard to the GRAT ends, precisely what is left in the GRAT is distributed to the trust fund beneficiaries (children or other beneficiaries of the Grantor’s/ Trustmaker’s option).

The amount of the annuity repayment that is needed to be paid to the Grantor/Trustmaker throughout the term of the GRAT is computed using a rate of interest that is recognized routine month-to-month by the IRS called the section 7520 price. The section 7520 rate for December 2013 is 2.0% as well as will boost to 2.2% for January 2014, which is still extremely low undoubtedly.

The Grantor/Trustmaker can establish the annuity settlement to ensure that it will certainly be specifically equal to the location 7520 rates of interest, suggesting that theoretically all the homes that have actually been relocated into the GRAT will be returned to the Grantor/Trustmaker in the form of the annuity repayments and also nothing will be left for flow to the youngsters or other receivers when the GRAT finishes.
While usually the transfer of properties possessed by somebody into an irreversible trust for the advantage of someone else would certainly be deemed a gift for government existing tax obligation functions, with a GRAT considered that in theory every one of the properties moved in could go back to the Grantor/Trustmaker, the well worth of the present to the receivers of the GRAT will go to or close to $0. This is called a “zeroed-out GRAT.”

OUR DEDICATION TO YOU
Each of our customers is unbelievably vital to us. Our company believe that every successful partnership is based on count on, stability and exceeding assumptions. Which’s the standard we constantly strive for.