将委托人保留年金信托（GRAT）用于财富转移目的

Using a Grantor RetainedAnnuity Trust (GRAT) forWealth Transfer Purposes What is a GRAT?A grantor retained annuity trust(GRAT) is a wealth transfer techniqueused by taxpayers who want to giftfuture asset appreciation to heirs. It allows an individual, the grantor, to essentially freeze hisinterest in the growth of an asset and give any excess futuregrowth to beneficiaries, without incurring gift tax. GRATs are a popular estate planning tool and have allowedtaxpayers to transfer significant wealth to heirs. How does a GRAT work? value of the annuity payments equals the amounttransferred to the GRAT, plus an assumed rate of return,commonly referred to as the IRC (Internal Revenue Code)7520 rate or hurdle rate. This results in the grantorbeing treated as having made no taxable gift to the ultimatebeneficiaries of the GRAT because, from a present valueperspective, the grantor will receive back everything hetransferred in the form of annuity payments. Accordingly,taxpayers are not required to use any of their lifetimegift and estate tax exemption when executing a zeroed-outGRAT. Figure 1 illustrates the GRAT concept. To execute a GRAT, the grantor transfers property to anirrevocable trust with a fixed term, typically two to fiveyears, and retains the right to receive an annuity duringthe trust’s term. The annuity payment is calculated atthe outset and can be made with cash or in kind with trustproperty. At the end of the term, any assets remainingin the trust pass to the trust’s beneficiaries, typically thegrantor’s children. In a “zeroed-out” or “Walton” GRAT, which is namedafter the court case involving Wal-Mart heiress AudreyWalton, the annuity amount is set so that the present Tax Implications As previously mentioned, executing a zeroed-out or WaltonGRAT does not result in a taxable gift and, therefore,neither exhausts any of the taxpayer’s remaining gift andestate tax exemption nor creates a gift tax liability. Froma wealth transfer perspective, this makes the use of a GRATanalogous to a free pull at a slot machine. If the GRAT“hits,” assets are transferred to the beneficiaries free of gifttax. If it doesn’t, the grantor is in the same tax situation asbefore the GRAT was executed. number should be used for any bank or brokerageaccounts opened in the name of the GRAT. Once the GRATterm ends and the final annuity payment has been made,the remaining assets are transferred to the beneficiaries,who will bear the tax burden for any future income theassets generate. A GRAT is not an effective tool to leverage a taxpayer’sgeneration-skipping transfer (GST) tax exemption. Whilethe decision to allocate GST can be made at any time, theactual allocation of GST cannot be made until the GRATterm ends, resulting in the ability to allocate GST onlyon the full value of the remaining assets. Consequently,GRATs are typically structured to transfer wealth solelyto the next generation. With respect to income taxes, the grantor is treated as theowner of the assets during the GRAT term and reports allincome earned by the GRAT on his individual income taxreturn. To avoid having to file its own fiduciary income taxreturn, the GRAT should not apply for a separate taxpayeridentification number. Rather, the grantor’s Social Security Why are GRATs Popular? A principal reason for the wide use of GRATs is that theyare one of the few sophisticated wealth transfer techniquesthat are IRS approved. IRC section 2702 contains thespecific requirements for GRATs and, as long as theserequirements are met and GRATs are administeredproperly, they are unlikely to be challenged by the IRS.Consequently, risk-averse taxpayers generally chooseto implement GRATs rather than other wealth transfertechniques. resulting in a larger taxable gift and corresponding gifttax liability. However, GRATs can be drafted so that thereis an automatic adjustment to the annuity payment in theevent the IRS assesses a higher value in the gifted property.This ensures that properly structured GRATs will remainzeroed-out from a gift tax perspective and prevents anyunintended gift tax consequences. Use of GRATs has surged in recent years since theirpotential for wealth transfer is magnified in low-interest-rate environments. Because GRATs succeed in transferringwealth only if the underlying assets appreciate morequickly than the IRC 7520 rate, all else equal, one shouldlook to execute GRATs when interest rates are low. IRC7520 rates have steadily decreased over the past 25 yearsand have hovered between 1% and 6% in recent years.* Another reason GRATs are favored, particularly whendealing with hard-to-value assets like private companiesor partnerships, is that they contain minimal valuationrisk. One of the primary risks of any wealth transfertechnique is that the IRS will audit the transaction andassess a higher value for the assets being transferred, *IRS.gov Why are GRATs Popular?(continued) to the grantor during the annuity term and nothingwill be left for