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Estate Planning with GRATs and QPRTs

(465 reviews)

Produced on September 13, 2016

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Course Information

Time 61 minutes
Difficulty Intermediate

Course Description

The Grantor Retained Annuity Trust, or “GRAT” and the Qualified Personal Residence Trust “QPRT” are two of the most popular, statutorily validated estate planning techniques relied upon by estate planning professionals. The GRAT enables the transferor to convey property while retaining an annuity payment for a specified period, and the QPRT enables a grantor to transfer a personal residence to a trust while reserving the right to remain in occupancy for a period of time. Each of these wealth transfer tools involve a transfer of assets to a trust while the grantor retains a continued interest in the trust property, which can enable a reduction in the value of the reportable gift. If used correctly, these techniques provide a tremendous opportunity for intergenerational wealth transfer, and can offer significant transfer-tax benefits.

However, Internal Revenue Code Section 2702(a) provides that where a grantor creates a trust for the benefit of family members and retains an “unqualified” interest in the transferred property, such a transfer will be deemed a gift of the whole property and the retained interest will be allocated zero value. Fall into this trap, and significant tax exposure for your client can result. This is why practitioners that work with GRATs and QPRTs must be aware of the proper use of these tools, as well as technical rules which define what will constitute a qualified interest and enable the tax benefits of these techniques.

In this course Jordan Linn details the statutory requirements, risks and advantages, and recent developments concerning these two popular estate planning methods. 



Learning Objectives:

  1. Understand an overview of the Federal Unified Estate and Gift Tax Exemption
  2. Identify issues related to lifetime gifts, including the use of discounts in gifts of fractional or encumbered Interests
  3. Address the issues in IRC 2702 - Qualified Interests vs. Non-Qualified Interests
  4. Determine what a “GRAT” is and how it is used, including “Zeroed Out” Walton GRATs
  5. Answer the question “What is a ‘QPRT’? and how is it used?
  6. Discuss items such as mortality risks, different interest rate environments and qualified interests, and recent developments and alternative planning options.

Credit Information

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Faculty

Jordan Linn

Chavez Perlowitz & Luftig

Jordan S. Linn focuses his practice on estate planning and administration. This includes structuring and implementing sophisticated gift, estate and generation-skipping tax planning techniques; drafting trust agreements, wills and advance directives; and also representing fiduciaries in the probate and administration of estates and trusts. Jordan represents clients involved in Internal Revenue Service (IRS) audits and U.S. Tax Court proceedings related to gift, estate and excise taxes, as well as the formation and representation of private foundations and public charities.



Reviews

RB
Robyn B.

Great

CC
Christine C.

Hands down, the best CLE I've taken. extremely informative, explained clearly and concisely.

MS
Margaret S.

Excellent presentation

AP
Anthony P.

Great Presentation

PE
Paul E.

Excellent presentation, even with the new tax law in effect.

SW
Stuart W.

Done very, very well. Jordan presents very clearly and completely!

GP
Gregory P.

thank you

EP
Eric P.

Good course but a lot of it may change with the new tax code. Those planning on choosing this course may want to wait for a 2018 update.

DG
David G.

Very knowledgeable.

ST
Susan T.

Great information

AS
Allan S.

Nice presentation on a complicated area.

KN
KAREN N.

Great

DO
David O.

Very Informative

LB
Louise B.

great content of a complex subject

AW
Allan A. W.

Excellent explanation and presentation

EG
elisa g.

great job! really clear.

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