The technique, known as a grantor retained annuity trust, or GRAT, allows rich families to pass on wealth while dramatically cutting their estate and gift tax bills.

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The first is a GRAT (grantor retained annuity trust ), which Facebook billionaires Mark Zuckerberg and Dustin Moskovitz set up to shelter gains that otherwise would be taxable to their as yet-unborn heirs.

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The ruling also applies to special kinds of grantor trusts, such as a generation-skipping trust, which is designed to avoid taxes at the grantor's children's deaths, as well as a grantor-retained annuity trust, where the grantor can transfer any amount of property betting that it will grow faster than the payments he is required to receive back from the trust over a period of years.

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Very popular over the last ten years and different from the defective grantor trust discussed above, grantor retained annuity trusts (GRATs) have been used to transfer appreciating assets to future generations free of gift tax.

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