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But eventually the tax liability is paid. If after death, they get hit with the estate tax which is even worse than just eating the income tax. Taking out loan
by missedthecue 4y ago
But eventually the tax liability is paid. If after death, they get hit with the estate tax which is even worse than just eating the income tax.
Taking out loans defers tax. It does not avoid or lower it.
- kasey_junk 4y agoAh but you see, once you are ready for your estate to take the money you set up a granter retained annuity trust. So long as you don’t die, and your trust earns more than the IRS theoretical rate you can pass on the money almost tax free. While still getting loans against it.
- missedthecue 4y agoIf you put assets in a GRAT you can't borrow money against it
- sokoloff 4y agoThis is correct; GP mis-typed the income angle. Instead of taking loans as typed, the grantor retains the right to receive an annuity stream over the trust's term.
- kasey_junk 4y agoRight. What I meant is you can get the loans against the balance before putting it into the trust and after the trust itself provides the income.