Stites on Estates is off to a fun start, and we’ve written a series on grantor retained annuity trusts.

Part 1 provides a brief overview of how GRATs work.

Part 2 provides a case study of how an entrepreneur in a very risky, high payoff, “long shot” business setting could use a GRAT to improve his risk-adjusted net-of-tax returns on entrepreneurship, while still retaining enough upside to amply fund retirement spending if the venture worked out.

Part 3 offers another case study of using GRATs for somewhat less risky ventures that produce reasonably predictable cash flows — repeating liquidity events.  For example, an author could fully fund his current lifestyle needs, while keeping the government away from his wealth-building for the benefit of his descendants.

The case studies in the series show how changed conditions — a much higher estate tax exemption — offer new opportunities to put familiar tools like GRATs to different, creative, and productive uses.

GRATs thrive on volatility, and, as Robert Frank noted in his recent book The High-Beta Rich, the circumstances of the top 1% to 10% of the income and asset distribution are becoming more volatile than they used to be.  Visit Stites on Estates if you’re able, and consider how GRATs might be a useful part of planning for uncertain business upside.

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The Conversation Continues at Stites on Estates

by Carter Ruml on April 9, 2014

On January 6, 2014 I joined Stites & Harbison PLLC as a Member, leading the Trusts & Estates practice in their Louisville office.  I’m very excited to continue the conversation started at KYEstates.com at Stites on Estates, published by me and my colleagues David Porter and Richard Wehrle, and which launches tomorrow.  Thank you for your continuing readership and support.  Please do visit Stites on Estates often.

KYEstates will remain available as a resource for readers, and also because the pictures from Spring Break, Florida, 1948 are too fun to take down!

Careers develop in unexpected ways.  I appreciate the fine lawyers and professionals at Wyatt and PNC who taught me a lot, and remain close friends.

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Your Publisher’s New Opportunity at PNC Wealth Management

I am excited to share the news that I am joining PNC Wealth Management on December 28, 2010 as a Senior Wealth Planner in their Louisville office. My colleagues at PNC will include Chris Staples, Jim Turner, and Melanie Warren, who are well known in Kentucky’s T&E Community. PNC’s Wealth Planning Group is led by […]

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One Small Latin Phrase Can Turn Your Heirs Into Mad Men (and Women)

Mad Men Season 4 has ended, and we’re all trying to evaluate whether or not Megan is a good idea. That’s the truly significant question, but it’s a long time until Season 5 begins, which means that the T&E Community needs to get back to business as usual, even on a Sunday night like this […]

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Using Political Futures Markets to Forecast Your Estate Tax Exemption

You can tell your readers care about you when for four weeks you don’t post, and they begin to inquire after your health. Thank you, and your publisher is pleased to report that he is alive and very well! This has been a very busy month. No one seems to have gotten the memo that […]

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When Bad IRA Rollovers Happen to Good People

As we approach the Congressional midterm elections (still with no action on the estate tax), one often hears opinions in certain quarters that the government isn’t efficient. Studiously expressing no opinion about these claims generally, KYEstates is pleased to report that they’re untrue in at least one respect: the IRS has become very efficient at […]

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Variable Prepaid Forwards – Hedge At Your Own Risk…

At KYEstates, we’re happiest reporting on taxpayer victories, but if we have to report a loss, it mitigates our disappointment when the case is interesting. Anschutz v. Comm’r, 135 T.C. No. 5 (July 22, 2010), is that sort of case: an interesting taxpayer loss.  In this instance, a very expensive taxpayer loss (likely exceeding $21 […]

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The Tax Man Likes Home Additions, But Not Tear-Downs

Anyone who has been following Elena Kagan’s confirmation hearings is up to speed on the judicial activism/strict construction debate. Strict construction of an exclusion from taxable income powered a notable win for the IRS in Gates v. Comm’r, 135 T.C. 1 (July 1, 2010), a very interesting income tax case that will have implications for private […]

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What Will Happen to Your Income Taxes in 2011?

On the estate tax front, it’s been a Macbeth/Faulkner fortnight in Congress – full of sound and fury, signifying nothing. Meanwhile, however, the clock is also ticking on expiration of the 2001 and 2003 Bush tax cuts, potentially affecting many private clients and business owners. To that end, readers may be quite interested in the […]

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“Pension Asset Transfer” Life Insurance Strategy Nixed By Tax Court

Although normal activity in much of Louisville seems to be temporarily suspended this weekend due to one of the most impressive logistical enterprises since the Berlin Airlift, the children’s swimming City Meet, the T&E Community still needs tax updates, and KYEstates is happy to share this report on Matthies v. Comm’r, 134 T.C. No. 6 (Feb. 22, 2010). In Matthies, […]

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