GRATS

April 13, 2006

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Grantor retained annuity trusts (GRATS) are a complex method of transferring assets to the next generation with minimal gift or estate taxation. The are actually fixed annuities for a fixed number of years. Their complexity requires expert legal advice.

GRATS are a way to make gifts, and transfer the fair market value of assets, on a discounted basis since only part of the gift gets valued in the irrevocable trust. There are several other forms of trusts, such as charitable lead trusts, grantor retained income trusts (GRITS) and so forth that are permutations of this concept.