One way to reduce taxes tomorrow is to 'freeze' assets today. In this article, the author explains two ways to freeze assets that have interested his key clients. In addition, these techniques allow for the sale of large amounts of needed additional life insurance. Effective strategies to freeze assets include the gifting or selling of assets to "grantor trusts." Both techniques freeze assets at today's values, but they take different forms and lead to different consequences. With a grantor-retained annuity trust (GRAT), clients can gift and transfer income-producing assets to an irrevocable trust, receiving a stream of income from the annuity for the term of the trust. If clients and their advisors are willing to be more aggressive, they might consider a tactic not specifically spelled...
Although a large majority of family businesses are managed by senior family members who are older than age 55 and more than 80% of such senior family members claim that they want the business to remain in the family, less than 30% of such businesses have tackled the challenge of developing a plan for transitioning the business to the next generation. For over 90% of such families, this planning challenge is aggravated by the fact that they have no diversified wealth. The technical challenges of designing such a transition plan that meets the specific objectives of the family, including the family's tolerance for complexity, are examined. Through the use of a simple case study, this article reviews essential elements that should be carefully evaluated in the design of any transition plan...
..., packaged into a medley of partnerships, trusts, limited liability companies (LLCs), and corporate... marble shifting strategies, such as grantor retained annuity trusts and intentionally defectiv...
Grantor retained annuity trust
A Grantor Retained Annuity Trust is an estate-planning technique particularly attractive in a low-interest-rate environment such as we are experiencing. It allows an individual to make large gifts without paying gift tax or using any unified credit. Many families have used short-term GRATs to shift appreciation to beneficiaries with no estate or gift tax cost. The technique is so successful that Congress has had this planning technique in its sights for a while, and it looks like the use of short-term GRATs will be curtailed soon. Legislation passed the House July 1 and is expected to be considered soon by the Senate.
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