abstract:A grantor retained annuity trust (commonly referred to by the acronym GRAT), is a financial instrument commonly used in the United States to make large financial gifts to family members without paying a U.S.
The technique, known as a grantorretainedannuitytrust, or GRAT, allows rich families to pass on wealth while dramatically cutting their estate and gift tax bills.
The first is a GRAT (grantor retainedannuitytrust ), which Facebook billionaires Mark Zuckerberg and Dustin Moskovitz set up to shelter gains that otherwise would be taxable to their as yet-unborn heirs.
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 annuitytrust, 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.