Has anyone used a Grantor-Retained Interest Trust?

[zoomzip]

I'm just learning about irrevocable trusts and was wondering if anyone out there had considered a variable annuity GRIT as part of their.  I can see how it would be good for avoiding estate taxes, probate, and protecting the assets from seizure, but I don't yet understand all of the downsides.  In particular, whether one could control how assets are invested as part of the GRIT to try to match up the 4% rule, the effect of trust administrator costs, and the like.

Interested in any thoughts that folks have.

[wbranch]

At a CPA firm I worked at for we had a large high net worth (high 9 figures) client that probably had every type of trust there was. Biggest downside will likely be attorney and CPA fees, they will easily get into the 5 figures. Transferring assets into GRITs and similar trust require gift tax returns, there will be annual trust tax returns, and probably more planning/monitoring. How close are you to having to worry about estate tax? Part of the problem with trusts and estate planning is there are attorney offices willing to setup complicated trusts for just about everyone out there willing to pay a few $1k in fees. The only thing some of these people are avoiding is probate, which would be simple for most of them.

When you start searching these types of trusts, most of the articles refer to "sophisticated" estate planning and high net worth. Here is one old article:
http://archives.cpajournal.com/old/14476937.htm

[zoomzip]

Thanks, I'm still pretty far away from estate tax and I'm nowhere close to 9 figures.

The structure I was thinking about was to put, let's say 50% of my liquid assets into an inflation adjusted annuity GRIT, where my wife and I are the beneficiaries (and our kids have the survival interest).  If we could cause the trustee to hold the assets in the right set of ETFs, the annuity would be a means of locking in the 4% (or whatever) rule.  The biggest upsides I see here are:

1. It gets my hands off the money so I can't freak out in a recession
2. Its protected from creditors
3. It locks in withdrawals

I think you are right that the biggest downside is going to be the fees and the complexity associated with fees.

So negatives are:

1. Fees.
2. Complexity (and the fees associated with complexity).
3. Loss of control of the funds, which cannot be withdrawn even in an emergency.