A great time for a GRAT – How to transfer more to your heirs at a lower tax cost

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Abstract: If you’ve graduated beyond making annual exclusion gifts and are looking to do more, perhaps a grantor retained annuity trust (GRAT) would fit your needs. Although it’s a relatively sophisticated strategy, when carefully planned and executed, the GRAT could allow you to transfer substantial amounts of wealth to your children or other heirs while minimizing — or even eliminating — gift and estate taxes. And, by establishing a long-term GRAT while interest rates are low, you can enhance the GRAT’s tax-saving potential. This article explains how a GRAT works and its tax-saving advantages.