So here’s a way to help Mom and Dad if you have made a lot of money!
Grantor retained annuity trusts, or GRATs, allow wealthy children to pass investment gains to their parents or grandparents without dipping into their $5 million lifetime gift-tax exemptions.
“It’s sort of a heads-I-win, tails-I-win technique,” said Allen Laufer, managing director for New York-based SilvercrestAsset Management Group.
The strategy hasn’t escaped the attention of President Barack Obama’s administration, which is recommending imposing10-year minimum terms on GRATs that would make them less appealing for children looking to pass money on to elderly parents, according to Joseph Falanga, president of the Cleveland-based National Association of Estate Planners &Councils.
GRATs Let Children Pass Millions to Mom or Granny Free of U.S. Gift Taxes – Bloomberg