A GRAT allows you to remove the future appreciation from your taxable estate. This is a powerful strategy to help mitigate your estate taxes getting even more assets to your heirs.
If you have assets that you expect to appreciate over time, do you want your heirs to pay more estate taxes then they have to? Of course not, without a GRAT, your beneficiaries may be exposed to estate and/or gift taxes.
A GRAT is a certain type of irrevocable trust that you can put your assets into, then you receive an income stream (taxable) for a term you decide. If structured well you can even eliminate the gift tax. At the end of the term, whatever is left in the GRAT goes to your heirs. They are then able to put the money in a new trust with creditor protection.
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