In the new Legal Forum Column, John S. Lueken discussed several benefits of estate planning with a GRAT. Read his advice below and don’t miss our monthly Legal Forum Column in Louisville Business First.


What are a few benefits of estate planning with a Grantor Retained Annuity Trust (GRAT)?


A GRAT is a trust created and funded by an individual (“client”) which pays the client an annuity for a certain number of years. At the end of its term, the GRAT terminates and any remaining assets are distributed to the named beneficiary with minimal to no gift tax cost. When drafted and funded properly, a GRAT can transfer a significant amount of wealth tax-free to intended beneficiaries.

Unlike many estate planning techniques, the client can have significant access to GRAT assets and can substitute assets, change beneficiaries, and otherwise modify the GRAT to suit his or her changing needs. While the potential estate and gift tax-savings are substantial, there are several risks to this planning technique. An estate planning attorney can help you mitigate these risks through careful planning and periodic adjustment as needed.