GRAT如何将业务增长传递给下一代

What is a GRAT?A grantor retained annuity trust (GRAT) is a wealth transfer techniqueused by taxpayers who want to gift 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 value 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 trust 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 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, 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 only 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 tax 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 administered 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. 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 should 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 transfer *IRS.gov Why are GRATs Popular?(continued) to the grantor during the annuity term and nothingwill be left for the beneficiaries. Although this may seemlike a failed transaction, the taxpayer is not any worseoff for having established the GRAT: the taxpayer still has The following example quantifies the benefit of executingGRATs in a low-rate environment like the one we currently Assume $2 million in marketable securities werecontributed to a five-year GRAT and that these securitiesearned a 9% annualized return during this period. If theGRAT were executed at an IRC 7520 rate of 2.0%, about$600,000 would remain in the trust at the end of five yearsand successfully pass to the trust’s beneficiaries at thattime. If the IRC 7520 rate were 5%, the same transaction In addition, the administrative costs associated withGRATs are nominal. Legal fees must be paid to an attorneyto draft the trust document and a gift tax return needs tobe filed. Further, the trustee of the GRAT needs to ensurethat the annuity payments are made every year. While The primary risk associated with GRATs is mortality risk.In nearly all instances, if the grantor dies during the trustterm, the transaction will fail and all of the trust assets,including income and appreciation, will be pulled backinto his estate. Mortality risk can generally be mitigated byexecuting shorter-term GRATs, making them significantly Costs/Risks of Executing GRATsRelative to the opportunity for significant wealth transfer and corresponding estate tax savings, the costs associated From a wealth transfer perspective, if the assetstransferred to a GRAT appreciate more slowly than theIRC 7520 rate, the GRAT will n