Florida Grantor Retained Annuity Trust

• Category: Trusts - Misc.
• State: Multi-State
• Control #: US-13197BG
• Format: Word; Rich Text

Description

This form is used for a grantor retained annuity trust. Florida Granter Retained Annuity Trust (GREAT) is a specialized estate planning tool that allows individuals to transfer assets to their chosen beneficiaries while retaining a certain level of control over those assets and potentially minimizing estate taxes. This trust enables the granter (the person creating the trust) to transfer assets, such as securities, cash, or real estate, into the trust for a specified period of time. During this time, the granter receives an annual annuity payment from the trust, which is calculated based on the value of the assets initially transferred, the length of the annuity term, and prevailing interest rates. One significant advantage of using a GREAT is the potential to reduce estate taxes. By placing assets into the trust, the granter effectively freezes their value for estate tax purposes. If the assets appreciate at a rate higher than the applicable federal rate, the excess growth can be passed on to beneficiaries without incurring additional estate taxes. The annuity payments received by the granter are subject to income tax, but because the payments are structured to return the initial value of the transferred assets over the annuity term, the tax impact can be mitigated. Additionally, any remaining assets in the trust after the annuity term ends are transferred to the beneficiaries free of estate and gift taxes, further enhancing the tax efficiency of a GREAT. In Florida, there are different types of Granter Retained Annuity Trusts available. These include: 1. Standard Granter Retained Annuity Trust (GREAT): This is the most common type of GREAT. It operates as described above, with the granter receiving fixed annuity payments for a predetermined term. 2. Zeroed Out Granter Retained Annuity Trust: In this type of GREAT, the annuity payments are set in such a way that the present value of the annuity is equal to the value of the assets transferred into the trust. This effectively reduces the taxable gift to zero, making it a useful estate planning strategy for individuals who have fully utilized their lifetime gift tax exemption. 3. Rolling GREAT: A rolling GREAT allows the granter to continuously create new Grants, transferring assets into each trust after the previous one terminates. This strategy can be effective in leveraging the potential future appreciation of assets. 4. Charitable Lead Annuity Trust (FLAT): While not strictly a GREAT, a FLAT is a variation of a GREAT that includes a charitable component. In a FLAT, the annuity payments are made to a charitable organization for a specified term, after which the remaining assets pass to non-charitable beneficiaries. This type of trust can provide both income tax and estate tax benefits. It is crucial to consult with an experienced estate planning attorney or financial advisor to determine the most suitable type of Florida Granter Retained Annuity Trust for your individual circumstances and goals.

Florida Granter Retained Annuity Trust (GREAT) is a specialized estate planning tool that allows individuals to transfer assets to their chosen beneficiaries while retaining a certain level of control over those assets and potentially minimizing estate taxes. This trust enables the granter (the person creating the trust) to transfer assets, such as securities, cash, or real estate, into the trust for a specified period of time. During this time, the granter receives an annual annuity payment from the trust, which is calculated based on the value of the assets initially transferred, the length of the annuity term, and prevailing interest rates. One significant advantage of using a GREAT is the potential to reduce estate taxes. By placing assets into the trust, the granter effectively freezes their value for estate tax purposes. If the assets appreciate at a rate higher than the applicable federal rate, the excess growth can be passed on to beneficiaries without incurring additional estate taxes. The annuity payments received by the granter are subject to income tax, but because the payments are structured to return the initial value of the transferred assets over the annuity term, the tax impact can be mitigated. Additionally, any remaining assets in the trust after the annuity term ends are transferred to the beneficiaries free of estate and gift taxes, further enhancing the tax efficiency of a GREAT. In Florida, there are different types of Granter Retained Annuity Trusts available. These include: 1. Standard Granter Retained Annuity Trust (GREAT): This is the most common type of GREAT. It operates as described above, with the granter receiving fixed annuity payments for a predetermined term. 2. Zeroed Out Granter Retained Annuity Trust: In this type of GREAT, the annuity payments are set in such a way that the present value of the annuity is equal to the value of the assets transferred into the trust. This effectively reduces the taxable gift to zero, making it a useful estate planning strategy for individuals who have fully utilized their lifetime gift tax exemption. 3. Rolling GREAT: A rolling GREAT allows the granter to continuously create new Grants, transferring assets into each trust after the previous one terminates. This strategy can be effective in leveraging the potential future appreciation of assets. 4. Charitable Lead Annuity Trust (FLAT): While not strictly a GREAT, a FLAT is a variation of a GREAT that includes a charitable component. In a FLAT, the annuity payments are made to a charitable organization for a specified term, after which the remaining assets pass to non-charitable beneficiaries. This type of trust can provide both income tax and estate tax benefits. It is crucial to consult with an experienced estate planning attorney or financial advisor to determine the most suitable type of Florida Granter Retained Annuity Trust for your individual circumstances and goals.