Illinois Estate Planning and Elder Law Blog
In a recent article in the Wall Street Journal titled, How to Fix Your Life in 2009, Eleanor Laise provides advice for individuals whose stock portfolios have been beaten down.
She suggests taking advantage of the $13,000 exemption from gift taxes that one can use to give up to $13,000 in stocks to as many recipients as one wants without incurring any gift tax liability. This has the advantage of reducing the size of one’s estate and, accordingly, one’s estate tax liability. It also allows the recipients of the gift to benefit from an increase in stock prices over the long term.
Another suggestion is to consider a Grantor Retained Annuity Trust or GRAT. Ms. Laise points out, “You can put your beaten-down stock in the GRAT, name your children as beneficiaries, and receive an annuity from the trust based on a percentage of what you contributed. As long as you survive the trust term, often just a couple of years, any stock appreciation beyond a ‘hurdle rate’ set by the government passes to the beneficiaries tax-free. That hurdle rate, currently 3.4 %, is at historically low levels, and it’s set to move even lower”.
If you are interested in additional information regarding Grantor Retained Annuity Trusts or other estate planning tools, contact an estate planning law firm.