A lot has been said about the meteoric rise of Facebook; and the founders of the company, Mark Zuckerberg and Dustin Moskovitz, have become very wealthy as a result of their big idea. But extraordinary success comes with a price tag.
When you have more money than you’re going to be able to spend throughout your lifetime you have to consider asset transfers, and the IRS sits poised to pounce if you give gifts while you are alive or arrange for bequests to be made after you pass away. The rate of the estate/gift tax is 35% at the present time, and it is scheduled to rise to 55% at the end of this year.
As a result estate planning lawyers will recommend tax efficiency strategies to their clients who are faced with the prospect of paying the estate tax. One of these is the “zeroed out” GRAT strategy. According to a recent article in Forbes, the Facebook founders utilized this strategy to preserve a significant amount of wealth.
This course of action involves funding the trust with appreciating assets. In a case where you are holding highly sought after shares in a company that is going to be going public at some point in the future placing them in a grantor retained annuity trust can be highly beneficial. This was the case with the Facebook founders.
If you’re interested in crafting a legacy plan that is tailor-made to fit your unique situation, don’t hesitate to pick up the phone to arrange for a consultation with a good Ashland, Kentucky estate planning lawyer.