I am considering modifying my estate plan to include a GRAT. What type of assets should I consider placing in the trust?

If you are starting to learn more about a grantor retained annuity trust (GRAT) in an effort to reduce your potential estate or gift tax liability, you have likely read or been told that only certain types of assets are appropriate for this estate planning technique. This is true—the assets should appreciate during the term of the GRAT so that you can transfer the appreciated value of the asset to your heirs without paying gift taxes. Generally, using a GRAT is low risk and the minimum amount that the assets must appreciate, as outlined in the tax code, is surprisingly low.

So, what are the best types of assets to transfer to a GRAT?  Following are seven examples:

  1. An investment portfolio that is high-yield or high-growth
  2. Commercial rental property
  3. Closely held stock
  4. Interests in a family limited partnership
  5. Real estate with a high potential for appreciation
  6. Precious metals
  7. Artwork

Whether or not your estate contains assets that would work well in a GRAT is a determination that you should make with the advice of an experienced estate-planning attorney in Anaheim. The risks associated with a properly executed GRAT are low and the rewards can be huge.

To learn more about this and other estate planning techniques that might offer significant cost savings for your heirs, sign up to receive our free newsletters. You may also wish to call our office to schedule an appointment to review your estate plan with one of our experienced attorneys.