FYI: Extreme stock market volatility is problematic for many wealthy folks in the U.S. who use a popular estate-planning tool to pass assets to heirs during their lifetimes. While grantor-retained annuity trusts, or GRATs, can be highly beneficial during times of rising stock prices, they become either worthless or challenging to use when stock values decline.
But for those who already have a GRAT, estate-planning experts say there are ways to preserve the benefits of these trusts, even in turbulent times.
First, a quick primer on how GRATs ideally work: You fund a GRAT with assets you believe will appreciate in value. During the life of the trust, you receive an annuity intended to draw down the original value of the assets you put into the trust. At the end of the trust’s term, the assets’ appreciation goes to heirs, free of gift and estate taxes.
Regards,
Ted
https://www.barrons.com/articles/preserving-grats-in-any-financial-climate-51553875200
