Author: AskMyFinance Editorial Team

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A Qualified Opportunity Zone (QOZ) is a census tract designated by the IRS as economically distressed. When you invest capital gains in a Qualified Opportunity Fund (QOF) that operates in one of these zones, you can defer those gains — and potentially reduce them — under a program created by the Tax Cuts and Jobs Act of 2017.

The program is designed to push private investment into low-income communities. In exchange for taking on the risk of investing in these areas, investors receive significant tax benefits on their capital gains.

How Qualified Opportunity Zones Work

1. You realize a capital gain. This can be from selling stock, real estate, a business, crypto, or any other asset.
2. Within 180 days, you invest some or all of the gain in a Qualified Opportunity Fund (QOF). A QOF is a corporation or partnership that invests at least 90% of its assets in QOZ property.
3. The original gain is deferred. You do not pay tax on the deferred gain until you sell your QOF investment or December 31, 2026 — whichever comes first.
4. If you hold the QOF investment for at least 10 years, any appreciation in the QOF investment itself is permanently excluded from tax.

The Three Tax Benefits

1. Deferral

The gain you roll into the QOF is deferred until the earlier of: when you sell the QOF interest, or December 31, 2026. As of 2026, this means deferred gains must be recognized by the end of this year unless the law changes.

2. Reduction (Mostly Gone)

Under the original program, investors who held QOF investments for 5 years received a 10% reduction in deferred gain, and 7-year holders received a 15% reduction. These step-ups required investing before 2020 or 2021 respectively, and the relevant deadlines have mostly passed. New QOZ investments today do not qualify for gain reduction under current law.

3. Exclusion of New Gain

This remains the most powerful benefit for new investors. If you hold your QOF investment for at least 10 years, any appreciation in the QOF investment is permanently excluded from federal income tax when you sell. The gain you rolled in is taxed; the growth on top of it is not.

Example: You roll $500,000 of capital gains into a QOF. Over 10 years, the QOF investment grows to $1,500,000. When you sell, you owe tax on the original $500,000 deferred gain. The additional $1,000,000 of growth is tax-free.

What Is a Qualified Opportunity Fund?

A QOF is the vehicle you invest in. It must be structured as a corporation or partnership, and it must hold at least 90% of its assets in “qualified opportunity zone property.” That means:

• QOZ stock (equity in a business located in a QOZ)
• QOZ partnership interests
• QOZ business property (tangible property used in a QOZ business)

Self-certifying as a QOF is done by filing IRS Form 8996 with the fund’s annual tax return. You can set up your own QOF or invest in an existing one sponsored by a real estate developer or investment firm.

What Assets Qualify for QOZ Investment?

Only capital gains can be deferred through the QOZ program. You roll in the gain amount (not the full proceeds) into the QOF. The types of qualifying gains include:

• Short-term and long-term capital gains
• Section 1231 gains (from business property)
• Collectibles gains

Ordinary income does not qualify for deferral under this program.

The 180-Day Window

You have 180 days from the date you recognize the capital gain to invest it in a QOF. For gains from the sale of a partnership interest or S corporation stock, the 180-day clock may start on the last day of the entity’s tax year or the partnership’s return due date — work with a tax advisor to get this right.

QOZ Real Estate vs. QOZ Business

Most QOF investments are in real estate — commercial buildings, mixed-use development, or housing projects in designated zones. Real estate QOFs are more common because the rules are clearer and the assets are easier to value.

Business-focused QOFs invest in operating businesses within QOZs. These can be higher-risk but also higher-reward. The business must derive at least 50% of its gross income from active business operations within the zone.

Risks of QOZ Investing

• Illiquidity: QOF investments are typically locked up for 10+ years. They are not publicly traded.
• Real estate development risk: Many QOFs invest in construction projects that may face delays, cost overruns, or market downturns.
• Tax risk: The deferred gain must eventually be recognized. If tax rates rise significantly, the deferral benefit shrinks.
• Regulatory risk: The QOZ program could change — the 10-year exclusion might not survive future legislation.
• Zone selection: Not all QOZs are equal. Some designated zones have seen significant investment and development; others remain economically distressed.

QOZ vs. 1031 Exchange

Feature	QOZ / QOF	1031 Exchange
Asset types that qualify	Any capital gain	Real estate only
Investment requirement	Gain only (not full proceeds)	Full proceeds must be reinvested
Gain deferral	Until sale or Dec 31, 2026	Indefinite (if you keep exchanging)
New gain exclusion	Yes, after 10 years	No (step-up at death)
Investment flexibility	Any QOZ investment	Like-kind real estate only

How to Find Qualified Opportunity Zones

The IRS and CDFI Fund maintain maps of all designated QOZs. You can also use the Opportunity Zone lookup tool at opportunityzones.hud.gov to check whether a specific property or census tract qualifies.

There are approximately 8,764 designated Opportunity Zones across the US, including all 50 states, Washington DC, and US territories.

Tax Reporting

You report your QOF investment on IRS Form 8997. You also must file Form 8949 and Schedule D in the year you defer the gain and the year you recognize it. Many investors work with a CPA who specializes in QOZ transactions — the reporting rules have nuances that can trigger penalties if done incorrectly.

For more on strategies to minimize capital gains, see our guide on capital gains tax rates and minimization strategies.

FAQ

What is a Qualified Opportunity Zone?

A QOZ is an IRS-designated economically distressed census tract. Investors who roll capital gains into Qualified Opportunity Funds operating in these zones can defer and potentially reduce their tax bill.

How long do you have to hold to get the tax exclusion?

At least 10 years. After 10 years, any appreciation in your QOF investment is permanently excluded from federal income tax.

Can ordinary income be invested in a QOF?

No. Only capital gains qualify for the deferral program.

What happens to deferred gains in 2026?

Under current law, all deferred QOZ gains must be recognized by December 31, 2026. Investors will owe tax on the originally deferred amount at that point.

Is QOZ investing risky?

Yes. Investments are illiquid and often tied to real estate development. The tax benefit is meaningful, but the underlying investment must make economic sense on its own.

Rates as of May 2026. QOZ rules are complex. Consult a tax advisor before investing.

This page contains affiliate links. If you use these links to open accounts or apply for financial products, we may earn a commission at no extra cost to you. Our editorial opinions are our own.

A donor-advised fund (DAF) is a giving account held by a public charity. You contribute money or assets to the account, get an immediate tax deduction, and then recommend grants to the charities you want to support — on your own timeline. The sponsoring organization (such as Fidelity Charitable or Schwab Charitable) handles all the legal and administrative work.

DAFs have exploded in popularity over the last decade. In 2024, Fidelity Charitable alone received over $13 billion in contributions. They are now the most popular charitable giving vehicle in the country — ahead of private foundations, community foundations, and outright gifts to charity.

How a Donor-Advised Fund Works

1. Open an account. You open a DAF account with a sponsoring organization — Fidelity Charitable, Schwab Charitable, Vanguard Charitable, or a community foundation. Minimum contributions range from $5,000 to $25,000 depending on the provider.
2. Contribute assets. You transfer cash, stock, mutual funds, or other assets into the DAF. The moment you transfer the assets, you receive a charitable deduction. The assets now legally belong to the sponsoring charity.
3. Invest the funds. While the money sits in the DAF, you invest it in a menu of mutual funds or investment pools offered by the sponsor. It grows tax-free.
4. Recommend grants. When you are ready, you recommend grants to IRS-qualified charities. The sponsoring organization reviews the grant (to confirm the charity qualifies) and sends the money.

Your “recommendation” is almost always honored — sponsoring organizations rarely reject grant requests to legitimate charities. You advise, they approve, the charity receives the grant.

Tax Benefits of a DAF

Immediate Deduction

You get the charitable deduction in the year you contribute, not the year you grant to charity. This is the core planning tool. You can make a large contribution in a high-income year, take the deduction immediately, and distribute the grants over many years.

Appreciated Asset Contribution

If you contribute appreciated stock or other assets held more than one year, you deduct the full fair market value — and avoid capital gains tax on the appreciation. This is often the highest-leverage use of a DAF.

Example: You own stock worth $100,000 with a cost basis of $20,000. If you sell the stock, you owe capital gains tax on $80,000. If you contribute the stock to a DAF, you:

• Avoid the capital gains tax entirely
• Get a $100,000 charitable deduction
• The full $100,000 is available to grant to charity

Deduction Limits

DAF contributions are deductible up to:

• 60% of adjusted gross income (AGI) for cash
• 30% of AGI for appreciated long-term capital gain property

Unused deductions carry forward for up to five years.

Who Sponsors DAFs?

The major national providers include:

• Fidelity Charitable: No minimum grant ($50 minimum), wide investment options, industry-leading platform. No annual fee on the first $500K.
• Schwab Charitable: $500 minimum account, $50 minimum grant. Good integration with Schwab brokerage accounts.
• Vanguard Charitable: $25,000 minimum initial contribution, $500 minimum grant. Strong investment options focused on low-cost index funds.
• Community foundations: Local community foundations often offer DAFs with more personalized service and local giving expertise.

DAF vs. Private Foundation

Feature	DAF	Private Foundation
Setup cost	None	$5,000–$50,000+
Annual maintenance	Very low (admin fee only)	High (legal, accounting, staff)
Deduction limit (cash)	60% AGI	30% AGI
Deduction limit (appreciated stock)	30% AGI (FMV)	20% AGI (cost basis only)
Privacy	Grants can be anonymous	Public records
Control	Advisory (not legal)	Full
Mandatory payout	None	5% per year required

For most people, a DAF is better than a private foundation. It costs less, requires no staff, offers higher deduction limits, and allows anonymous giving. Private foundations make sense mainly when you want to hire family members to run the foundation or make grants internationally.

The Bunching Strategy

One powerful use of DAFs is the “bunching” strategy for people who take the standard deduction most years:

1. Instead of making $15,000 in charitable donations every year (which may not exceed the standard deduction), you contribute $45,000 to a DAF in one year.
2. In that year, the $45,000 contribution pushes you above the standard deduction and you itemize — saving taxes on the full $45,000.
3. You grant the money to charities over the next three years as you normally would.

The result: same charitable impact, but you get a tax benefit you would have missed by spreading the donations across three years.

What Assets Can You Contribute to a DAF?

• Cash
• Publicly traded stock, mutual funds, ETFs
• Restricted stock (with some limitations)
• Real estate (at major DAF sponsors)
• Private business interests (at some sponsors)
• Cryptocurrency (at many major DAF sponsors)
• Required Minimum Distributions (note: QCDs from an IRA go directly to charity, not to a DAF — RMDs cannot fund a DAF directly)

For more on Required Minimum Distributions and charitable strategies, see our guide on how to reduce your taxable income.

Can You Grant to Any Charity?

You can recommend grants to any IRS-qualified 501(c)(3) public charity. You cannot grant to:

• Individuals
• Private foundations (in most cases)
• Political organizations or campaigns
• Scholarships in your own name (with some exceptions)

Grants from a DAF can be made anonymously. This is useful if you want to give large amounts without revealing your identity to the recipient charity.

DAF Limitations

• No take-backs: Once you contribute assets to a DAF, they belong to the sponsoring charity. You cannot withdraw them for personal use.
• Advisory role only: You recommend grants; the sponsoring organization has final approval. In practice they almost always honor recommendations, but legally they do not have to.
• No direct benefits: You cannot use DAF grants to pay for event tickets, auction items, or any goods and services you receive in return.

How to Get Started

Opening a DAF takes about 15 minutes online. Go to Fidelity Charitable, Schwab Charitable, or Vanguard Charitable and complete the account application. Fund with cash or by transferring appreciated stock from your brokerage account. You can start granting to charities as soon as the contribution clears.

For estate planning tools that complement a DAF, see our guides on Charitable Remainder Trusts and federal estate tax strategies.

FAQ

What is a donor-advised fund?

A DAF is a charitable giving account at a public charity. You contribute assets now, get an immediate deduction, and recommend grants to your chosen charities at any time.

How much do you need to open a DAF?

It depends on the provider. Fidelity Charitable has no stated minimum. Schwab Charitable requires $500. Vanguard Charitable requires $25,000.

Can you take money back out of a DAF?

No. Once contributed, the assets belong to the sponsoring charity. You can only recommend grants to qualified charities — not withdraw funds for personal use.

Is a DAF better than a private foundation?

For most donors, yes. DAFs cost nothing to set up, have higher deduction limits, allow anonymous giving, and require no staff or mandatory payouts.

Can you contribute cryptocurrency to a DAF?

Yes. Most major sponsors accept crypto. You avoid capital gains tax and deduct the full fair market value at the time of contribution.

Rates as of May 2026. Consult a tax advisor before making large charitable contributions.

Related: Charitable Lead Trust (CLT): Give Now, Pass Wealth Later

This page contains affiliate links. If you use these links to open accounts or apply for financial products, we may earn a commission at no extra cost to you. Our editorial opinions are our own.

A Charitable Remainder Trust (CRT) is a tax-exempt trust that pays income to you (or other beneficiaries you name) for a period of time. When that period ends, whatever is left in the trust goes to the charity of your choice. In return, you get an upfront charitable deduction and the ability to sell appreciated assets inside the trust without paying immediate capital gains tax.

CRTs are one of the most powerful tools in the charitable giving toolbox. They turn appreciated property into an income stream, reduce your tax bill, and support causes you care about — all at the same time.

How a CRT Works

1. You transfer appreciated assets (stocks, real estate, a business) into the trust.
2. The trust sells the assets. Because the trust is tax-exempt, it pays no capital gains tax on the sale.
3. The trust invests the proceeds and pays you income (either a fixed dollar amount or a percentage of the trust value each year).
4. You receive a charitable deduction equal to the present value of what the charity will eventually receive.
5. When the trust ends (either after a set term or at your death), the remaining assets go to your chosen charity.

The income stream is not tax-free. The IRS uses a “tier” system to determine how distributions are taxed. Ordinary income comes out first, then capital gains, then tax-exempt income, then return of principal. Your tax advisor can walk you through the specific treatment for your situation.

Two Main Types of CRTs

Charitable Remainder Annuity Trust (CRAT)

A CRAT pays a fixed dollar amount each year. The amount never changes, regardless of how the trust performs. Once funded, you cannot add more assets to a CRAT. The fixed payout makes income predictable.

Charitable Remainder Unitrust (CRUT)

A CRUT pays a fixed percentage of the trust’s value each year. Because the trust is revalued annually, the actual dollar payment goes up or down with the trust’s performance. You can add assets to a CRUT over time. A CRUT with a “net income plus makeup” provision (NIMCRUT) can also defer payments to future years.

Most planners prefer CRUTs because they offer more flexibility and allow additional contributions.

The Charitable Deduction

When you fund a CRT, you receive a charitable deduction equal to the present value of the remainder interest (the amount the charity is projected to receive at the end). The IRS calculates this using the Section 7520 rate and actuarial tables.

As a general rule:

• Higher interest rates = larger charitable deduction (more valuable remainder)
• Older beneficiaries = larger deduction (shorter income stream = more left for charity)
• Shorter trust term = larger deduction

The deduction is limited to 30% of your adjusted gross income for contributions of appreciated property. Unused deductions can be carried forward for five years.

Capital Gains Tax Deferral

This is often the biggest benefit for donors with highly appreciated assets. Say you bought stock for $50,000 that is now worth $500,000. If you sell it directly, you owe capital gains tax on $450,000 of gain. At the 20% federal rate plus the 3.8% net investment income tax, that is roughly $107,100 in taxes — before state taxes.

Inside a CRT, the trust sells the stock tax-free. The full $500,000 is reinvested. The gains are not eliminated — they come out as you receive distributions — but you defer recognition and spread the gain over many years. Meanwhile, the full pre-tax amount generates income for you.

CRT vs. Direct Charitable Gift

Feature	Direct Gift	CRT
You keep income stream	No	Yes
Capital gains tax on appreciated assets	No (deduction only)	Deferred, spread over term
Upfront deduction	Full fair market value	Partial (remainder value only)
Heirs receive assets	No	No (charity gets remainder)
Complexity	Simple	High

Who Should Consider a CRT

A CRT makes the most sense if you:

• Have highly appreciated, low-basis assets (stock, real estate, a business)
• Want to convert an illiquid asset into an income stream
• Have charitable intent — the remainder must go to a qualified charity
• Are in a high tax bracket
• Do not need to leave the contributed assets to heirs (though you can replace them with life insurance in a separate “wealth replacement trust”)

CRTs are less useful if you have assets without significant appreciation, if you need to keep the assets accessible, or if you have no charitable intent.

The Wealth Replacement Trust Strategy

One common concern: assets that go into a CRT eventually go to charity — not to your heirs. Many estate planners address this with a “wealth replacement trust.” You use some of the income from the CRT to fund a life insurance policy held in an irrevocable life insurance trust (ILIT). The death benefit of the policy replaces the value of the donated assets for your heirs.

This combination — CRT plus ILIT — lets you:

• Get a deduction now
• Defer capital gains
• Generate income for life
• Still leave wealth to your heirs (via life insurance)
• Support charity

IRS Minimum Requirements

To qualify as a CRT under the tax code, the trust must meet several requirements:

• Annual payout to income beneficiaries must be at least 5% of the initial trust value (CRAT) or 5% of the annual trust value (CRUT)
• The payout rate cannot exceed 50%
• The present value of the charitable remainder must be at least 10% of the initial contribution
• The trust must be irrevocable

How to Set Up a CRT

You need an estate planning attorney to draft the trust document. The trust must be qualified under IRC Section 664. You will also need a trustee — often a bank trust department, a community foundation, or the charity itself serves as trustee.

Costs typically run $3,000–$10,000 for legal drafting. Many large charities and community foundations offer CRT administration services.

For more on estate planning tools that work alongside a CRT, see our guide to federal estate tax and how to minimize it and our explanation of how GRATs work.

FAQ

What is a Charitable Remainder Trust?

A CRT is a tax-exempt trust that pays income to you for a set period, then transfers the remaining assets to charity. You get a partial charitable deduction when you fund it.

What is the minimum payout rate for a CRT?

The IRS requires at least 5% per year — either as a fixed amount (CRAT) or a fixed percentage of the current trust value (CRUT).

Do you pay capital gains tax when you contribute appreciated assets?

Not immediately. The trust sells the assets tax-free and reinvests the full proceeds. You recognize the gains gradually as you receive income distributions.

What happens to a CRT when I die?

The remaining trust assets pass to the named charity. The trust bypasses probate.

What is the difference between a CRAT and a CRUT?

A CRAT pays a fixed dollar amount every year. A CRUT pays a fixed percentage of the trust’s current value, so the actual dollar amount rises or falls with trust performance. CRUTs allow additional contributions; CRATs do not.

Rates as of May 2026. IRS Section 7520 rates change monthly. Consult an estate planning attorney and CPA before setting up a CRT.

Related: Charitable Lead Trust (CLT): Give Now, Pass Wealth Later

This page contains affiliate links. If you use these links to open accounts or apply for financial products, we may earn a commission at no extra cost to you. Our editorial opinions are our own.

A GRAT is a legal trust you set up during your lifetime. You put assets into the trust and receive annuity payments back for a set number of years. When the trust ends, whatever is left goes to your heirs free of gift and estate tax. If the assets grow faster than the IRS interest rate, your heirs get that extra growth at no tax cost to you.

GRATs have been used by some of the wealthiest families in the country to move billions of dollars out of taxable estates. But they are not just for billionaires. Anyone with appreciating assets and an estate that may be subject to federal estate tax can benefit from the strategy.

How a GRAT Works

Here is the basic structure:

1. You transfer assets into the GRAT — typically stocks, a business interest, or real estate.
2. The trust pays you fixed annuity payments over the trust term (usually two to ten years).
3. The IRS uses a benchmark rate called the Section 7520 rate (also called the hurdle rate) to calculate the taxable gift at the time you fund the trust. If you structure the annuity correctly, the taxable gift is close to zero.
4. At the end of the term, the remaining assets pass to your heirs or into a family trust with no additional gift or estate tax.

The key: if the assets in the GRAT grow faster than the Section 7520 rate, that excess growth transfers to your heirs tax-free. In a low-rate environment, even modest growth beats the hurdle.

The Section 7520 Rate

The IRS publishes a new Section 7520 rate each month. As of May 2026, the rate is approximately 5.0%. This means your assets need to grow faster than 5.0% annually during the GRAT term for any value to pass to heirs.

GRATs work best when:

• Interest rates are low (lower hurdle rate = easier to beat)
• The assets you put in are expected to appreciate significantly
• You are funding the trust right before a major liquidity event — a company IPO, for example

Zeroed-Out GRAT

The most common form is the zeroed-out GRAT. You structure the annuity payments so that the present value of those payments equals the full value of what you put into the trust. The taxable gift is zero (or very close to it). You use up no lifetime gift tax exemption.

If the trust assets grow faster than the 7520 rate, the excess goes to your heirs tax-free. If the assets do not beat the hurdle rate, the assets simply come back to you through the annuity payments. You are no worse off than if you had done nothing — except for legal fees.

This asymmetric risk profile is why GRATs are so popular. The downside is limited; the upside can be enormous.

Rolling GRATs

Some estate planners recommend “rolling” GRATs — short-term trusts (often two years) that are reset repeatedly. When the first GRAT ends, you roll the assets into a new GRAT. This strategy:

• Locks in gains from periods of strong performance
• Reduces the risk that a market decline will wipe out the strategy
• Keeps the hurdle rate short and manageable

The downside of rolling GRATs is administrative cost — each new trust requires legal setup.

What Assets Work Best in a GRAT

Not all assets are equally good candidates for a GRAT. The best are those with high expected growth or short-term appreciation events:

• Pre-IPO stock: If you hold shares in a company about to go public, a GRAT funded right before the IPO can move the post-IPO gain to heirs tax-free.
• Volatile stock: The optionality of the strategy benefits from volatility. If the stock surges, heirs get the gain. If it tanks, it comes back to you.
• Business interests: Minority interests in private businesses, which already carry valuation discounts, work well.
• Real estate with growth potential: Works, though harder to value and less liquid for annuity payments.

Assets that do not work well: cash (grows too slowly to beat the hurdle), bonds (same issue), and deprecating assets.

GRAT vs. Other Estate Planning Strategies

GRATs are one of several techniques for moving wealth out of your estate. Here is how they compare to common alternatives:

Strategy	How Wealth Transfers	Gift Tax Risk	Requires Surviving Term
GRAT	Growth above 7520 rate	Low (zeroed-out)	Yes
IDGT (Intentionally Defective Grantor Trust)	Full asset value	Uses exemption	No
Outright gift	Full asset value now	Uses exemption	No
QPRT	Home equity at discount	Low	Yes

The GRAT’s main weakness: if you die during the trust term, the assets come back into your estate. This is the “mortality risk.” Short-term GRATs (two to three years) reduce this risk.

Tax Treatment

During the GRAT term, you pay income tax on all income and gains generated by the trust assets. This sounds like a disadvantage, but it is actually a feature. Every dollar of tax you pay on behalf of the trust is an additional tax-free transfer to your heirs (because the trust does not shrink from the tax bill).

When the trust terminates and assets pass to heirs, the heirs receive the assets at the grantor’s original cost basis. There is no step-up in basis at the end of the GRAT term. This is different from assets inherited at death, which typically get a stepped-up basis.

How to Set Up a GRAT

GRATs are not a DIY project. You need:

1. An estate planning attorney to draft the trust document. This typically costs $3,000–$10,000 depending on complexity.
2. A CPA or tax advisor to handle the gift tax return (Form 709) filed in the year you fund the trust.
3. A trustee — can be a professional trustee or a trusted family member (not you, as the grantor).
4. A qualified appraiser if you are funding with non-publicly-traded assets.

The total cost to set up a GRAT can run $5,000–$20,000 for a sophisticated transaction. Rolling GRATs add ongoing costs each cycle.

Who Should Consider a GRAT

A GRAT makes sense if:

• Your estate is large enough to face federal estate tax (over $13.6 million per person in 2026, though this exemption may drop after 2025 law changes)
• You have assets with high expected near-term appreciation
• You are in good health (mortality risk matters)
• You do not need the assets for yourself — the annuity payments come back, but the growth goes to heirs

GRATs are less useful for smaller estates well under the exemption amount, for people in poor health, or for assets expected to grow slowly.

Legislative Risk

Congress has proposed changes to GRAT rules multiple times, including requiring a minimum taxable gift (eliminating zeroed-out GRATs) and minimum trust terms. None of these proposals have passed as of May 2026, but the strategy’s future is not guaranteed. If you are planning to use a GRAT, sooner is generally safer than later.

FAQ

What is a GRAT in simple terms?

A GRAT is a trust you fund with assets. You receive fixed annuity payments back over a set number of years. When the trust ends, any growth above the IRS hurdle rate goes to your heirs without gift or estate tax.

What happens if I die during the GRAT term?

If you die before the trust ends, the assets come back into your taxable estate. This is called mortality risk. Shorter trust terms (two to three years) reduce this risk.

How much does it cost to set up a GRAT?

Expect $5,000 to $20,000 in legal and professional fees. Rolling GRATs add ongoing costs each cycle, but the potential estate tax savings often far outweigh the setup cost.

Is a GRAT the same as an irrevocable trust?

Yes. A GRAT is irrevocable. Once you fund it, you cannot take the assets back. Only the scheduled annuity payments return to you.

Do GRATs still work in 2026?

Yes. As of May 2026, GRATs remain a valid estate planning strategy. Congress has proposed restrictions but none have passed.

Rates as of May 2026. Section 7520 rates change monthly. Consult an estate planning attorney before implementing any trust strategy.

Related: Irrevocable Life Insurance Trust (ILIT): Remove Life Insurance from Your Taxable Estate

Related: Spousal Lifetime Access Trust (SLAT): Estate Planning for Married Couples

Related: Gift Tax Annual Exclusion 2026: How to Give Money Tax-Free

Related: Family Limited Partnership (FLP): Estate Planning and Tax Benefits Explained