If you’ve heard of tactics, such as an intrafamily loan, a grantor retained annuity trust or an intentionally defective grantor trust, it can be helpful to discuss these and which makes the most sense for you using the support of a knowledgeable estate planning and tax strategy lawyer.

Advanced trust options can help you accomplish multiple goals, but only when those trusts are aligned with your personal goals. Gifting is often a top priority for those engaged in estate planning, and loans can add to the benefits associated with using a trust.

One of the easiest gifting strategies in this category is to make a cash loan to the person you intend to benefit. That loan does get documented with the possibility of using a balloon payment at maturity or interest only payments. This does have tax implications for the borrower as well as the lender.

One of the primary benefits of using an intrafamily loan is that if the assets that are purchased using the loan grow in excess of the interest rate on that loan, the difference in those two rates will be beneficial for the borrower due to the gift tax free basis. In the event that the current low interest rate environment continues to apply over the life of the loan, the borrower and the lender can extend the benefit by refinancing when the loan reaches maturity.

More complex options with an advanced trust are available to you when it comes to tax strategies, including the intentionally defective grantor trust. The assets inside this trust can grow on an income tax free basis making it a potentially bigger benefit to your chosen beneficiaries. An annuity trust is one other option to explore with the help of a Georgia tax strategy or estate planning attorney.

One of the most common examples of an annuity trust is a grantor retained annuity trust. This is a beneficial strategy to use when interest rates are at all-time lows. Assets are transferred inside a GRAT with an annual annuity payment retained for a specified number of years. When the specified number of years passes, any of the assets still inside the trust pass to beneficiaries without further estate taxes applied. When the GRAT is funded is the time at which the IRS sets the annuity payments, meaning in low interest rate environments that these can be more favorable to you.

The GRAT’s assets are more likely to appreciate beyond the interest payment when the annuity payments are low. This means that the trust beneficiary can take advantage of a larger gift tax free distribution. Another alternative to explore in the current environment is a CLAT or a charitable lead annuity trust. The annuity in this case is a charity which makes it distinct from a GRAT. The projected calculation and benefit, however, is the same.

Asset growth is at a greater likelihood of exceeding the interest rate on the annuity, meaning that the distribution to the charity is bigger. Set aside a time to consult with experienced and knowledgeable financial advisors and estate planning attorneys to learn more about how to leverage tools like these and other advanced strategies to your benefit.