Massachusetts 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. Massachusetts Granter Retained Annuity Trust (GREAT) is a specific type of irrevocable trust that allows individuals in Massachusetts to transfer assets while retaining an annuity payment stream for a specified period. It is a valuable estate planning tool that helps individuals minimize estate taxes and transfer wealth to beneficiaries. A Massachusetts GREAT is established when a granter (the individual creating the trust) transfers assets into the trust, while also designating themselves as the beneficiary. The granter then receives annual annuity payments from the trust for a predetermined period, typically between 2 and 20 years. At the end of the annuity period, any remaining trust assets pass on to the named beneficiaries. The primary purpose of a Massachusetts GREAT is to reduce the granter's taxable estate while transferring assets to beneficiaries. By retaining the annuity interest, the granter effectively freezes the asset's value for the purpose of calculating estate taxes. Any growth in the assets during the annuity period passes on to beneficiaries outside the granter's taxable estate, thus minimizing estate tax liability. Massachusetts offers various types of Granter Retained Annuity Trusts, including: 1. Standard GREAT: This is the most common type of GREAT. It involves the granter receiving a fixed annuity payment based on the initial value of the assets transferred into the trust. 2. Zeroed-Out GREAT: In this variation, the granter structures the annuity payment so that it equals the present value of the assets transferred into the trust. This results in a taxable gift of zero, making it an attractive option for those seeking to minimize gift taxes. 3. Rolling GREAT: With a rolling GREAT, the granter establishes a series of Grants that successively distribute the remaining assets from the previous GREAT. This strategy allows for continued wealth transfer while maintaining control over the assets. 4. Granter Retained Unit rust (GUT): A GUT functions similarly to a GREAT but provides for annuity payments based on a fixed percentage of the trust's assets, recalculated annually. This can be attractive when assets are expected to appreciate significantly over time. 5. Net Income with Makeup Charitable Remainder GREAT (TIMEOUT): This type of GREAT allows for the granter to receive annuity payments based on the trust's net income, with the remaining trust assets passing to a charitable organization upon termination. When establishing a Massachusetts Granter Retained Annuity Trust, it is crucial to consult with a qualified estate planning attorney or financial advisor experienced in trust planning in Massachusetts. They can help determine the appropriate type of GREAT based on individual circumstances and ensure compliance with state laws and regulations.

Massachusetts Granter Retained Annuity Trust (GREAT) is a specific type of irrevocable trust that allows individuals in Massachusetts to transfer assets while retaining an annuity payment stream for a specified period. It is a valuable estate planning tool that helps individuals minimize estate taxes and transfer wealth to beneficiaries. A Massachusetts GREAT is established when a granter (the individual creating the trust) transfers assets into the trust, while also designating themselves as the beneficiary. The granter then receives annual annuity payments from the trust for a predetermined period, typically between 2 and 20 years. At the end of the annuity period, any remaining trust assets pass on to the named beneficiaries. The primary purpose of a Massachusetts GREAT is to reduce the granter's taxable estate while transferring assets to beneficiaries. By retaining the annuity interest, the granter effectively freezes the asset's value for the purpose of calculating estate taxes. Any growth in the assets during the annuity period passes on to beneficiaries outside the granter's taxable estate, thus minimizing estate tax liability. Massachusetts offers various types of Granter Retained Annuity Trusts, including: 1. Standard GREAT: This is the most common type of GREAT. It involves the granter receiving a fixed annuity payment based on the initial value of the assets transferred into the trust. 2. Zeroed-Out GREAT: In this variation, the granter structures the annuity payment so that it equals the present value of the assets transferred into the trust. This results in a taxable gift of zero, making it an attractive option for those seeking to minimize gift taxes. 3. Rolling GREAT: With a rolling GREAT, the granter establishes a series of Grants that successively distribute the remaining assets from the previous GREAT. This strategy allows for continued wealth transfer while maintaining control over the assets. 4. Granter Retained Unit rust (GUT): A GUT functions similarly to a GREAT but provides for annuity payments based on a fixed percentage of the trust's assets, recalculated annually. This can be attractive when assets are expected to appreciate significantly over time. 5. Net Income with Makeup Charitable Remainder GREAT (TIMEOUT): This type of GREAT allows for the granter to receive annuity payments based on the trust's net income, with the remaining trust assets passing to a charitable organization upon termination. When establishing a Massachusetts Granter Retained Annuity Trust, it is crucial to consult with a qualified estate planning attorney or financial advisor experienced in trust planning in Massachusetts. They can help determine the appropriate type of GREAT based on individual circumstances and ensure compliance with state laws and regulations.