North Carolina 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. A North Carolina Granter Retained Annuity Trust (NC GREAT) is a legal arrangement in which an individual, known as the granter, transfers assets into a trust while retaining the right to receive fixed annuity payments for a specified period. The purpose of a NC GREAT is to pass on wealth to beneficiaries while minimizing estate and gift taxes. In a NC GREAT, the granter transfers assets, such as real estate, securities, or cash, into the trust and determines a fixed annuity amount to be paid back to them annually. The annuity payment must be made for a defined term or the granter's lifetime. At the end of the annuity period, any remaining assets in the trust pass on to the designated beneficiaries, typically family members or loved ones. A key feature of a NC GREAT is that the granter's retained annuity payments are calculated based on an assumed appreciation rate set by the IRS, known as the Section 7520 rate. If the assets in the trust grow at a rate higher than the Section 7520 rate, the excess growth will pass on to the beneficiaries, ultimately reducing the granter's taxable estate. Different types of North Carolina Granter Retained Annuity Trusts include: 1. Standard NC GREAT: This is the most common type, where the fixed annuity payments are made for a specific term chosen by the granter. At the end of the term, any remaining assets pass on to the beneficiaries. 2. Rolling NC GREAT: This type of GREAT allows the granter to create a new GREAT each year, maintaining the ability to "roll" assets from one GREAT to another. This strategy provides ongoing tax benefits, especially if the annuity payments are set to the minimum amount allowed by the law. 3. Zeroed-Out NC GREAT: Also known as a Walton GREAT, a zeroed-out GREAT is structured in a way that the present value of the annuity payments equals the value of the assets transferred into the trust, resulting in no gift tax due at the time of creation. Its purpose is to transfer any future appreciation of the assets to the beneficiaries while minimizing transfer taxes. Overall, a North Carolina Granter Retained Annuity Trust can be an effective estate planning tool for individuals looking to transfer wealth to their loved ones while minimizing tax liabilities. Consulting with an experienced estate planning attorney or financial advisor is crucial to understanding the specific benefits and intricacies of each type of NC GREAT and tailoring it to one's unique circumstances.

A North Carolina Granter Retained Annuity Trust (NC GREAT) is a legal arrangement in which an individual, known as the granter, transfers assets into a trust while retaining the right to receive fixed annuity payments for a specified period. The purpose of a NC GREAT is to pass on wealth to beneficiaries while minimizing estate and gift taxes. In a NC GREAT, the granter transfers assets, such as real estate, securities, or cash, into the trust and determines a fixed annuity amount to be paid back to them annually. The annuity payment must be made for a defined term or the granter's lifetime. At the end of the annuity period, any remaining assets in the trust pass on to the designated beneficiaries, typically family members or loved ones. A key feature of a NC GREAT is that the granter's retained annuity payments are calculated based on an assumed appreciation rate set by the IRS, known as the Section 7520 rate. If the assets in the trust grow at a rate higher than the Section 7520 rate, the excess growth will pass on to the beneficiaries, ultimately reducing the granter's taxable estate. Different types of North Carolina Granter Retained Annuity Trusts include: 1. Standard NC GREAT: This is the most common type, where the fixed annuity payments are made for a specific term chosen by the granter. At the end of the term, any remaining assets pass on to the beneficiaries. 2. Rolling NC GREAT: This type of GREAT allows the granter to create a new GREAT each year, maintaining the ability to "roll" assets from one GREAT to another. This strategy provides ongoing tax benefits, especially if the annuity payments are set to the minimum amount allowed by the law. 3. Zeroed-Out NC GREAT: Also known as a Walton GREAT, a zeroed-out GREAT is structured in a way that the present value of the annuity payments equals the value of the assets transferred into the trust, resulting in no gift tax due at the time of creation. Its purpose is to transfer any future appreciation of the assets to the beneficiaries while minimizing transfer taxes. Overall, a North Carolina Granter Retained Annuity Trust can be an effective estate planning tool for individuals looking to transfer wealth to their loved ones while minimizing tax liabilities. Consulting with an experienced estate planning attorney or financial advisor is crucial to understanding the specific benefits and intricacies of each type of NC GREAT and tailoring it to one's unique circumstances.