Advanced Wealth Transfer
Grantor Retained Annuity Trust (GRAT)
Transfer appreciating assets to your heirs with minimal or zero gift tax. You receive annuity payments during the trust term, and any growth above the IRS hurdle rate passes tax-free to your beneficiaries.
Understanding the Basics
What Is a GRAT?
A Grantor Retained Annuity Trust (GRAT) is an irrevocable trust designed to transfer appreciation on assets to your beneficiaries with minimal gift tax. You contribute assets to the trust and receive annuity payments back over a fixed term. At the end of the term, whatever remains in the trust passes to your beneficiaries.
The key to a GRAT is the IRS Section 7520 rate (also called the hurdle rate). If the trust assets appreciate faster than the 7520 rate, the excess growth passes to your beneficiaries completely free of gift and estate tax. The annuity payments can be structured to return nearly all of your original contribution, creating what is known as a "zeroed-out GRAT" with virtually no taxable gift.
GRATs are particularly effective during periods of low interest rates and for assets expected to appreciate significantly, such as pre-IPO stock, business interests, or real estate in growth markets.
Is It Right for You?
Who Is a GRAT For?
Business Owners Pre-Sale
If you are planning to sell a business or take it public, transferring interests into a GRAT before the liquidity event locks in the current lower valuation. Any appreciation from the sale passes to heirs tax-free.
Stockholders With Concentrated Positions
Company executives and early employees with large stock positions can use a GRAT to transfer future appreciation to heirs while retaining annuity payments to fund current expenses.
Real Estate Investors
Properties expected to appreciate significantly can be transferred into a GRAT. Rental income helps fund annuity payments while appreciation above the hurdle rate passes tax-free to beneficiaries.
Families Maximizing Gift Tax Exemption
A zeroed-out GRAT uses little to none of your lifetime gift tax exemption, making it ideal for families who want to transfer wealth without reducing their available exemption amount.
What You Get
Key Features
Zero Gift Tax Potential
Structure the annuity to return your full contribution, resulting in a taxable gift of approximately zero while transferring all appreciation.
Rolling GRAT Strategy
Use a series of short-term GRATs to capture appreciation across multiple periods, reducing the risk of underperformance in any single period.
Annuity Income Stream
Receive fixed annuity payments throughout the trust term, providing you with regular income while transferring growth to heirs.
IRS-Approved Structure
GRATs are established under IRC Section 2702 and are a well-recognized, court-tested estate planning technique accepted by the IRS.
The Process
How It Works
Asset Valuation
We help obtain a qualified appraisal of the assets you plan to transfer, establishing the baseline value for gift tax calculations.
GRAT Design
Our AI optimizes the term length, annuity structure, and asset allocation based on the current 7520 rate and your appreciation expectations.
Funding & Administration
Assets are transferred into the GRAT, and annuity payments are scheduled and managed throughout the trust term.
Remainder Distribution
At the end of the term, remaining trust assets pass to your beneficiaries or into a dynasty trust for continued multi-generational protection.
Maximize Your Wealth Transfer
Transfer Millions With Zero Gift Tax
GRATs have helped some of America's wealthiest families transfer billions in wealth to the next generation tax-free. Our AI optimizes the structure for your specific assets.
Schedule Free ConsultationNo credit card required. 30-minute consultation. 100% confidential.
Common Questions
Frequently Asked Questions
Turn Appreciation Into a Tax-Free Gift
A GRAT lets you keep your principal and transfer the growth. Our AI optimizes the structure for maximum tax efficiency. Start with a free consultation.