What Is a Grantor Retained Annuity Trust?

There are various different strategies that can be implemented to mitigate gift and estate tax exposure. In this post we will look at the value of the grantor retained annuity trust as a tax efficiency tool, but we should explain the federal transfer tax parameters first. Unified Gift and Estate Tax Exclusion The federal estate tax credit or exclusion is the amount that can be transferred free of the death tax. We are getting near the end of the 2014 calendar year, but for the rest of this year, the estate tax exclusion is $5.34 million. Every year there are inflation adjustments, and the adjustment for 2015 will be $90,000, so that will bring the exclusion up to $5.43 million. In addition to the estate tax, there is also a federal gift tax. It is unified with the estate tax, and as a result, the exclusion is a unified lifetime exclusion. The exclusion encompasses lifetime gifting along with the value of your estate. If you are exposed, you are looking at a top rate of 40 percent. Gra


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