St. Petersburg Grantor Retained Annuity Trust Attorney
Trusts are great tools when creating your estate plan. People sometimes use them to secure trusts for children with disabilities, protect beneficiaries, and to provide tax benefits. However, you may not want to lose control of your assets in case you require them later in life. With many types of trusts, you must relinquish legal control, but that is not the case with a grantor retained annuity trust (GRAT). Below, our St. Petersburg grantor retained annuity trusts attorney explains how these trusts work, and the benefits of them.
What is a Grantor Retained Annuity Trust?
A grantor retained annuity trust contains two important terms. The first is the GRAT term. During this time, you can receive an annuity payment based on the IRS rate that was in place when the GRAT was funded, as well as the fair market value of the assets that fund the trust. The second term is the remainder term. The remainder term starts when the GRAT term ends and assets are still held within the trust.
You, as the creator of the trust, are the only beneficiary of the trust during the GRAT term. The only distributions made from the trust are the annuity payments made to you. Once the GRAT term is over, the assets within the trust are for the benefit of your heirs, or they are distributed to them.
When interest rates are low, many people create a GRAT to pass the appreciation of their assets onto their loved ones. As long as the asset appreciation contributed to the GRAT is greater than the IRS rate, you can transfer the excess without being concerned about gift taxes.
Benefits of Grantor Retained Annuity Trusts
There are many benefits that come with creating a GRAT. You can avoid the need for your beneficiaries to pay gift taxes. Florida does not place a gift tax on inheritances, but federal law does. If your estate is large, a GRAT can help avoid these taxes, which are sometimes quite high.
You will also retain control of the GRAT during your lifetime and even benefit from it through the annuity payments. This can ensure that you have the financial resources you may need in the future.
Any assets you place within a GRAT are also protected from creditors. If you owe creditors debt, they can try to lay claim to your property through liens and other measures. This can be very restrictive. When you place assets in a trust, though, it is not susceptible to creditor claims.
Our Grantor Retained Annuity Trusts Attorney in St. Petersburg Can Help
The concept of trusts is fairly straightforward but it is not always easy to determine which one is right for you, or understand the rules that apply to them. David Toback is an experienced St. Petersburg grantor retained annuity trusts attorney who can advise you of your legal options so you can make the best informed decisions for you and your family. Call us now at 813-252-7529 or chat with us online to book a consultation and to learn more.
