avoiding estate and gift taxes

Interesting Strategy to Avoid Gift and Estate Taxes

One Strategy to help you avoid gift and estate tax

What’s a GRAT?

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.

Why does it matter?

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.

How GRATs work

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.

Obstacles

  1. GRATs are irrevocable. Make sure that you are committed to the strategy because it cannot be changed.
  2. The income stream is taxable. You may need to weigh which is more important to you, the estate taxes or income taxes.
  3. Your mortality is the most important factor in the success of this strategy. If you die during the term, the whole strategy is tainted.
  4. This is an advanced planning strategy and must be carefully administered by competent professionals and comply with the Internal Revenue Code.

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Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Gold Family Wealth, LLC), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Gold Family Wealth, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Gold Family Wealth, LLC is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the Gold Family Wealth, LLC’s current written disclosure statement discussing our advisory services and fees is available upon request. If you are an Gold Family Wealth, LLC client, please remember to contact Gold Family Wealth, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services.

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