A grantor retained annuity trust, or GRAT, is another estate-freezing device that can become more advantageous in a lower interest rate environment. An individual places into a GRAT assets that are likely to appreciate and that he wants to give to his heirs. In exchange, the grantor receives annuity payments. When those payments are higher, what remains in the trust will be lower and so will the value of the gift for tax purposes.     In fact, a GRAT is commonly structured with a predetermined annuity payment sufficiently generous to result in a zero value being placed on the gift. The lower the interest rate, the lower the annuity payments needed to "zero out" the gift. When the assets have appreciated to an amount that is greater than the cumulative annuity payments, it leaves a tax-free surplus return for the remainder beneficiaries. The current low interest rate environment, therefore, increases the likelihood that the assets will appreciate sufficiently to make the strategy work.

Similarly, a charitable lead annuity trust also benefits from low interest rates. In establishing a CLT, a person makes a gift to charity of annuity payments for a fixed term (measured by years or the lifetime of one or more persons). At the end of the annuity term, the trust assets pass to beneficiaries such as children or grandchildren. Once again, the lower the applicable interest rate, the greater the charitable deduction and the lower the gift tax on the assets that ultimately pass on to the non-charitable beneficiaries.

Still, the most important part of election-year planning is the fact that it gets people thinking. Washington politics clearly have a significant impact on the financial fortunes of both the wealthy and those of more modest means. By taking into account such events as presidential elections in their long-range planning, people will be able to take advantage of opportunities and avoid many risks.

Kenneth P. Brier is a partner of Brier & Geurden LLP, Needham, Mass., a boutique law firm focusing in the areas of taxation, estate planning, business planning, trusts and estates, and executive benefits.

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