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Attorney Randy Ratliff

Grantor Retained Annuity Trusts (GRATs)

Estate Planning Attorney Serving Nashville Area Residents

When it comes to the task of estate planning, there is no “one size fits all” approach. Each family, and, indeed, each individual, has a unique set of circumstances that should be taken into account in determining whether a will, trust, or other estate planning tool is best suited to accomplish that person’s goals. Nashville estate planning lawyer Randy Ratliff takes pride in providing his clients with accurate, up-to-date information concerning the potential risks and benefits of a myriad of possible estate planning options, including grantor retained annuity trusts (GRATs).

If you are considering the possibility of a GRAT or other trust, you should understand the general nature of a trust, how grantor retained annuity trusts operate, and how this popular estate planning tool works in conjunction with other documents such as a last will and testament or health care directive. For most people, several documents and tools are needed in order to fully effectuate their estate plan. It is also important that both individuals and couples speak to an attorney from time to time even after they have an estate plan in place, as the laws that concern matters such as trusts, estates, and taxation are subject to change.

Trusts – A Potentially Useful Part of a Well-Considered Estate Plan

The idea of a trust is fairly simple: the trust settlor’s assets are placed into the hands of a trustee, who manages those assets for the benefit of one of more beneficiaries. However, there are many different types of trusts, some of which are more appealing to someone approaching his or her golden years but many that may be useful for younger individuals, as well. Some situations can also call for a specific type of trust, such as the need to provide a family member who is mentally or physically disabled. Depending upon the settlor’s situation, he or she may also need a last will and testament to dispose of any non-trust property at death, as well as a power of attorney for health care in order to designate a trustworthy health care proxy to make medical decisions in the event of incapacity.

Grantor retained annuity trusts can be useful estate planning tools for those seeking to minimize the taxes due on large financial gifts to family members. Such trusts are irrevocable in nature, meaning that they cannot be changed in most instances. However, unlike many other kinds of irrevocable trusts, GRATs may only last for a pre-set number of years. Such trusts work by paying out an annuity to the settlor during these years, with the remainder going to the beneficiaries at the end of the set period. Because of their tax-reducing potential, GRATs may be an attractive option for individuals who own shares in startup companies or other “up and coming” types of businesses. When used properly, a grantor retained annuity trust can allow transfer of considerable assets to beneficiaries without affecting the grantor’s lifetime exemptions from estate and gift taxes. Of course, not everyone is a candidate for a GRAT. In most cases, such trusts are only recommended for those with a substantial amount of present wealth or potential future wealth. For those in other situations, a different type of trust may be a better option. For example, there are some trusts that are designed to allow a low income individual to qualify for TennCare, Medicare, or VA benefits when they might not otherwise be able to do so.

Talk to a Helpful Nashville Lawyer About Your Estate Planning Needs

If you think a grantor retained annuity trust may be for you, you should talk to an attorney who can explain the risks and benefits of such a legal vehicle, as well as other possible options. At the Randy Ratliff Law Offices, PLLC, we serve people throughout the greater Metropolitan Nashville area, including those in Hermitage, Antioch, Goodlettsville, Madison, Joelton, Brentwood, Franklin, and Cool Springs, as well as other communities in Davidson and Williamson Counties. To schedule a consultation, call us at 615-656-8282 or contact us online. Our office also handles family law cases and matters involving elder law, including elder abuse cases, nursing home contracts, and conservatorships.