ESTATE PLANNING ATTORNEY · AKRON, OH
Grantor Retained Annuity Trusts in Akron, OH
Spatz Law Group sets up grantor retained annuity trusts, often called GRATs, for Northeast Ohio families and business owners, so future growth on your assets passes to your children with little or no gift tax.
Passing on a business or investments that are about to grow
If you expect an asset to grow, like a family business, company stock or an investment account, passing that growth to your children now can save significant tax later. A grantor retained annuity trust lets you do that. You put the asset in the trust, receive fixed payments back for a set term, and any growth above an IRS-set rate goes to your children. Ohio has no estate or gift tax, so the savings are federal. With the federal exemption at $15 million per person in 2026, a GRAT matters most for business owners and families whose estates are near or above that line. Debra's finance background helps here, in valuing the asset and choosing the right term.
What happens if the assets don't grow
This is one of the reasons these trusts are popular. If the assets don't outperform the IRS rate, they simply come back to you through the annuity payments, and you're roughly where you started. There's little downside to trying.
Outliving the term
The one real risk is timing. If you die before the trust's term ends, the assets are generally pulled back into your estate. That's why many people choose shorter terms, sometimes setting up a new trust as each one ends, so they're likely to outlive each term.
Your attorney
Debra A. Spatz
Licensed in Ohio since 2008 · Ohio Supreme Court Reg. #0083356
Chicago-Kent College of Law · University of Illinois, Finance
Meet DebraBefore your first conversation
Bring recent statements or valuations for the assets you're considering, especially any business interests, and a sense of how much income you'll need from them.
★★★★★Google review
If you are looking for a local estate attorney in Bath, Ohio, Deb Spatz with Spatz Law Group is truly exceptional. I know several people who have worked with Deb, and they consistently share nothing but positive experiences. Deb takes the time to get to know you and your story, allowing her to create a plan that brings real peace of mind for you and your family. She even offers the option to record a legacy video for your loved ones, which is an incredibly meaningful and lasting gift. Do not wait until it is too late. I highly recommend calling Deb today.
Frequently Asked Questions
What is the IRS rate a GRAT has to beat?
It's an interest rate the IRS publishes each month. When your trust is created, that rate is locked in. Any growth on the trust's assets above it passes to your beneficiaries free of gift tax. When the rate is lower, it's easier for the assets to beat it.
Is a GRAT worth it if my estate is under the exemption?
Often not. Assets that pass to your children through a GRAT keep your original cost basis, so your children may owe capital gains tax when they sell. Assets they inherit at your death generally get a fresh cost basis instead. If your estate isn't likely to owe estate tax, keeping the asset and leaving it at death may save your family more. Debra runs both scenarios before recommending one.
How is a GRAT term chosen?
You choose the term when the trust is created. Shorter terms reduce the risk of dying before the term ends. Longer terms lock in the IRS rate for longer. Debra helps you pick what fits your age and the asset.
Can I put my business in a GRAT?
Yes, and family businesses are one of the most common uses. Business interests need a professional valuation when they go into the trust, and your operating agreement may need to allow the transfer. Both are handled before the trust is funded.
Do I still pay income tax on the trust's assets?
Yes. During the term, the trust's income is generally taxed to you. That's actually a benefit, because paying that tax yourself leaves more growth in the trust for your children without counting as an extra gift.
What does it mean for a GRAT to be zeroed out?
It means the annuity payments are set so the value of the gift to your children, at the start, is close to zero. You use little or none of your lifetime gift exemption, and your children receive whatever growth the assets produce above the IRS rate.