Rolling GRATS

Rolling GRATS

By: Martin M. Shenkman, CPA, MBA, JD

Short term grantor retained annuity trusts (GRATs) are a popular estate tax minimization tool that seek to remove upside equity market volatility from your estate. Some wealth managers increase or leverage this benefit by segregating different equity classes in different GRATs. However, if you are worried about malpractice or other lawsuits, this technique will shift significant unprotected securities back to your estate each year. One possible solution for those concerned about asset protection is to establish separate limited liability companies (LLCs) for different equity classes, and fund partial interests in each. This will separate rolling GRATs so the leakage retains some measure of protection.

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