Tennessee 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. Tennessee Granter Retained Annuity Trust (GREAT) is an estate planning tool utilized by individuals in Tennessee to protect their assets and minimize estate taxes. It is a legal and strategic financial arrangement that allows the granter to transfer assets to a trust while retaining an annual income stream from those assets for a defined period of time. This type of trust is particularly advantageous for individuals with high-value assets seeking to transfer wealth to the next generation. The Tennessee GREAT functions by transferring assets into the trust, typically consisting of appreciating assets such as stocks, real estate, or business interests. The granter then receives an annual annuity payment from the trust, which is determined at the creation of the trust based on factors like the value of assets, the granter's age, and interest rates. The annuity payment is fixed and cannot change throughout the GREAT's term. One of the significant advantages of a Tennessee GREAT is its potential to leverage the gift tax exemption. By setting up a GREAT, the granter can transfer assets to the trust at a discounted value, contributing to the reduction of potential estate taxes. If the assets in the trust experience growth greater than the IRS's assumed interest rate (known as the Section 7520 rate), the excess appreciation passes on to the trust's beneficiaries without incurring further gift taxes. Tennessee offers various types of Granter Retained Annuity Trusts that granters can consider based on their specific needs: 1. Traditional GREAT: This is the standard form of a GREAT, where the granter receives a fixed annuity payment each year for a predetermined period. 2. Zeroed-Out GREAT: In this variation, the annuity payment is set at a level that fully consumes the present value of the assets transferred to the trust. It reduces the taxable gift to zero, maximizing the potential estate tax reduction. 3. Rolling GREAT: A rolling GREAT is a series of consecutive Grants established with similar terms, allowing the granter to "roll" assets from one trust to another after the end of each trust's term. This strategy is effective when assets need time to appreciate before passing them on to beneficiaries. 4. Charitable GREAT: Also known as a Charitable Remainder Annuity Trust or GREAT, this type of trust allows the granter to receive the annuity payments during their lifetime, with the remaining assets passing to a charitable organization upon their death. This arrangement provides potential income tax deductions for the present value of the charitable donation. In summary, a Tennessee Granter Retained Annuity Trust (GREAT) is a powerful estate planning tool enabling individuals to transfer assets while still receiving income for a fixed period. Various types of Grants, including the traditional GREAT, zeroed-out GREAT, rolling GREAT, and charitable GREAT, offer flexibility and potential tax advantages based on the granter's objectives and estate planning goals.

Tennessee Granter Retained Annuity Trust (GREAT) is an estate planning tool utilized by individuals in Tennessee to protect their assets and minimize estate taxes. It is a legal and strategic financial arrangement that allows the granter to transfer assets to a trust while retaining an annual income stream from those assets for a defined period of time. This type of trust is particularly advantageous for individuals with high-value assets seeking to transfer wealth to the next generation. The Tennessee GREAT functions by transferring assets into the trust, typically consisting of appreciating assets such as stocks, real estate, or business interests. The granter then receives an annual annuity payment from the trust, which is determined at the creation of the trust based on factors like the value of assets, the granter's age, and interest rates. The annuity payment is fixed and cannot change throughout the GREAT's term. One of the significant advantages of a Tennessee GREAT is its potential to leverage the gift tax exemption. By setting up a GREAT, the granter can transfer assets to the trust at a discounted value, contributing to the reduction of potential estate taxes. If the assets in the trust experience growth greater than the IRS's assumed interest rate (known as the Section 7520 rate), the excess appreciation passes on to the trust's beneficiaries without incurring further gift taxes. Tennessee offers various types of Granter Retained Annuity Trusts that granters can consider based on their specific needs: 1. Traditional GREAT: This is the standard form of a GREAT, where the granter receives a fixed annuity payment each year for a predetermined period. 2. Zeroed-Out GREAT: In this variation, the annuity payment is set at a level that fully consumes the present value of the assets transferred to the trust. It reduces the taxable gift to zero, maximizing the potential estate tax reduction. 3. Rolling GREAT: A rolling GREAT is a series of consecutive Grants established with similar terms, allowing the granter to "roll" assets from one trust to another after the end of each trust's term. This strategy is effective when assets need time to appreciate before passing them on to beneficiaries. 4. Charitable GREAT: Also known as a Charitable Remainder Annuity Trust or GREAT, this type of trust allows the granter to receive the annuity payments during their lifetime, with the remaining assets passing to a charitable organization upon their death. This arrangement provides potential income tax deductions for the present value of the charitable donation. In summary, a Tennessee Granter Retained Annuity Trust (GREAT) is a powerful estate planning tool enabling individuals to transfer assets while still receiving income for a fixed period. Various types of Grants, including the traditional GREAT, zeroed-out GREAT, rolling GREAT, and charitable GREAT, offer flexibility and potential tax advantages based on the granter's objectives and estate planning goals.