Grantor Retained Annuity Trusts

On September 13, 2021, the House Ways and Means Committee released the text of the proposed legislation to fund the Build Back Better Act. In addition to reducing the current lifetime gift/estate and generation-skipping transfer (“GST”) tax exemptions by approximately one-half, the proposed legislation includes several provisions that could affect current estate plans and future estate planning, including changes to the ability to take valuation discounts on gifts of closely-held business interests and other assets, to make sales to grantor trusts, to use grantor retained annuity trusts (“GRATs”) and life insurance trusts.

We are monitoring developments closely. Because new legislation may go into effect quickly, leaving a short period of time to take advantage of the existing law, we recommend that you contact us as soon as possible if one of the following applies to you:

  • You have not used all of your lifetime gift and GST tax exemption (currently $11,700,000 per person or $23,400,000 per couple).
  • You have an existing grantor trust or have considered establishing one.
  • You have a life insurance trust.
  • You have been considering establishing a GRAT.
  • You have business or non-business assets that can be gifted at a discount (e.g., private investments, private equity interests, hedge fund interests which are held individually or through a corporation, family limited partnership or limited liability company).