ESTATE PLANNING ATTORNEY PASADENA

If your parents are like mine, they worked late nights, woke up early hours and ensured I got an excellent education and never wanted for anything (I even loved my little Sentra they gave me at 16). They did a great job raising me and I hope one day I can return the favor when they need it the most (both emotionally and monetarily). This blog addresses the money side of that help.
Arden Dale posted a new article, How to Help Parents Without Paying More Taxes, Smart Money, March 17, 2011. He suggests ways that a couple can give gifts to their parents without paying taxes. Some of the strategies include giving parents up to $52,000 a year, paying for their medical costs and making a home available for them.
In the article GRATs Let Children Pass Millions to Mom or Granny Free of U.S. Gift Taxes, Bloomberg columnist Elizabeth Ody examines how grantor retained annuity trusts, or GRAT’s allow wealth children to gift large sums to their parents without triggering gift taxes or reduing their lifetime exemption. Low Interest Rates and a 10-year minimum term proposed by the Obama Administration make this an attractive time to consider GRATs as an estate planning tool.
The acronym GRAT stands for grantor retained annuity trust. The grantor/donor transfers property into a trust (a GRAT) that provides that the grantor will receive each year a fixed annuity, usually for a term of years. At the end of the term, the remainder beneficiaries get whatever is left. The gift involved equals the theoretical value of the remainder, determined by using the discount rate (or rate of return) specified in IRC §7520.