Wealthy families are stepping back and looking at the bigger picture of their finances and estate planning strategy as a result of the coronavirus pandemic. Some want to know if it’s worth creating a grantor retained annuity trust to protect their interests and add a further layer of control to their estate plan.

Many of these high net worth families have already rethought their plans in light of the tax overhaul from 2017, making it relatively simple to avoid the US estate and gift tax.

However, extremely volatile markets today and quickly dropping interest rates have also created unique opportunities that are keeping financial and tax advisors extremely busy. One popular method available to wealthy families today is to think about using loans to trusts. These don’t eat into the gift tax or estate tax exemption.

One popular tool is the grantor retained annuity trust which allows a beneficiary to profit from any future gains and investment with no risk of losing their money so long as those returns remain higher than the IRS stated interest rate. It is easier for heirs to make money the lower the rates are. Another coronavirus related issue that is causing families to rethink their strategy is the fact that valuations are relatively low. With the GRAT, taxes for heirs are minimized when the trust is set up properly.

This has made it easier for wealthy people to transfer assets to heirs without using up a major part of the gift tax exemption. Our tax strategy law firm is here to assist you in deciding what changes if any, you need to make as a result of the recent pandemic. Schedule a consultation today to discuss your options for creating a grantor retained annuity trust for your beneficiaries.