Chicago Estate Planning Attorney – Grantor Retained Annuity Trusts (GRAT)

A grantor retained annuity trust (GRAT) is quite special, as it is a type of irrevocable trust that allows the grantor of the trust to pass down wealth to the beneficiaries for virtually zero estate or gift taxes. Furthermore, a GRAT includes a lifetime transfer of cash, assets, and/or property into the trust in exchange for an annuity payable to the grantor. When the trust expires, any property remaining in the trust passes to the beneficiary. Due to the complexities of this type of trust, it is important to have an experienced and prominent Chicago estate planning attorney at your side, helping you draft the trust and provide administration throughout the duration of the trust (including the transfer of property, if necessary).

Should You Use a GRAT?

GRATs are not ideal for any estate plan or type of asset. One of the major drawbacks of the GRAT is that it is actually a bit of a gamble. The amount of annuity paid to the grantor is determined by the IRS. This number is known as the monthly section 7520 rate. Therefore, the grantor of the trust must be willing to gamble that the trust’s assets will outperform the 7520 rate, that the grantor will live to see the end of the GRAT, and that the grantor will not need the gifted property later in life. Furthermore, GRATs are often subject to changes federal and Illinois legislation, and it can make them fairly unstable.

For a Case Evaluation, Call Chicago Estate Lawyer James Provenza Today

Forming a GRAT can be very beneficial, but also quite risky. For this reason, it is absolutely crucial to have an experienced lawyer providing legal counsel and administration of the trust. With decades of experience helping Chicago residents with their estates, Illinois estate attorney James C. Provenza boasts extensive knowledge and practical experience with a variety of trusts. As such, through one-on-one meetings with Provenza, we will gauge whether a GRAT is suitable for your assets. To speak about the creation and/or administration of your GRAT, you can call our Chicago law office today at (847) 729-3939.