GRATs and Grandkids

GRATs and Grandkids

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

Grantor Retained Annuity Trusts are a great technique to leverage gifts to children without gift tax. They are not used for grandchildren (skipped generation), because you cannot allocate GST (generation skipping transfer) exemption to avoid the GST tax on gifts to grandchildren until the GRAT is over, and the property presumably appreciated. If you’ve used up your $1 million lifetime gift exclusion, made no gifts to grandchildren, and don’t contemplate future large gifts to grandchildren, you might use a GRAT to leverage gifts to grandkids even if the allocation of GST exemption at the end of the GRAT term is inefficient. Caution: estimate the growth in GRAT assets to avoid exceeding the $2 million GST exclusion at the end.

Our Consumer Webcasts and Blogs

Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.

Ad Space