Law Tips: Hot Tips in Estate & Trust Practice, Part 1

Testamentary and lifetime withdrawal powers, tax reimbursement provisions, spousal interests and grantor trusts…..all areas of estate and trust practice that Richard Kissel, Taft Stettinius & Hollister LLP, Indianapolis, works through daily. I thank him for offering his valuable insights “from the trenches” for our Law Tips Hot Tips in Estate & Trust Practice series.

Recently Rick provided a few tips on how to better benefit clients. A portion of his presentation deals specifically with estate planning in a low interest rate environment. I am pleased to share that reminder with you on Law Tips today.

GRATs – Estate planning in a low interest rate environment.

  • Grantor Retainer Annuity Trusts are specially sanctioned under Internal Revenue Code § 2702 and the regulations promulgated thereunder.
  • A GRAT is a special trust whereby the donor transfers property to the trust and retains an annuity interest for a certain term of years.
  • The IRS assumes that the assets transferred to the trust will appreciate at the § 7520 rate in effect at the time of the transfer to the GRAT was made. Currently that amount is 1.2%, which for historical purposes is extremely low.
  • If the assets transferred to the GRAT appreciate at a rate greater than the § 7520 rate, that excess appreciation will pass to the succeeding trust beneficiaries free of transfer tax.
  • If the assets appreciate at or less than the § 7520 rate, all of the assets will be returned to the donor as if the transfer had never been made.

Rick Kissel’s estate planning and trust training covers other relevant topics, such as, how decanting provides the trustee with the ability to change certain types of trusts, issues with funding revocable trusts with matrimonial property and how the use of grantor trusts is substantial in estate planning. I am pleased to be continuing his advice in next week’s Law Tips. Stay tuned.

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About our Law Tips faculty contributor:
Richard Kissel II has been practicing in the field of estate planning for over 22 years. He focuses his practice on the areas of business succession, tax, corporate transactions, buy-sell agreements, employee benefits and other matters affecting closely-held businesses. Mr. Kissel has been certified as an Estate Planning and Administration Specialist by the Indiana State Bar Association. He has advised corporate executives, owners of closely-held businesses, and other individuals on a variety of domestic and international tax issues.

About our Law Tips blogger:
Nancy Hurley, Law Tips blogger, has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We plan to utilize her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook page, Twittering and other places her legal experience lends itself.

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