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CLIENT SITUATION

Two GRATs wanted to diversify their holdings by purchasing commercial real estate in addition to their existing marketable securities portfolio. The challenge was that GRATs needed to maintain a pre-determined amount of liquidity to fund the return of capital requirements to the grantors. In addition, a short escrow was needed to win the bid for the property requiring a closing with all cash proceeds.

OUR SOLUTION

Their Abbot Downing team structured a solution that met the short escrow for the real estate purchase, provided a funding mechanism for the annual payment to the Grantors and leveraged the GRATs and the Grantors’ liquid assets to provide equity for the purchase. Permanent financing was to be placed at a future date via a Wells Fargo led Agency loan.

THE RESULT

The GRATs investment portfolios were left intact for future appreciation and increased wealth transfer to the beneficiaries. The property was refinanced resulting in a reduction in the acquisition debt and the release of the Grantors’ assets as well as creating future borrowing availability. The GRATs’ holdings were diversified while maintaining sufficient cash flow and liquidity to fund the scheduled annual payment to the Grantors.


DISCLOSURES

These materials are provided for general education and illustration purposes only. They were prepared by Abbot Downing and have been obtained or derived from information we consider reliable, but we cannot guarantee their accuracy or completeness. Abbot Downing does not undertake to advise you of any change in the information contained in these materials.

Wells Fargo & Company and its affiliates do not provide legal advice. Please consult your legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of you own situation at the time your taxes are prepared.