Grantor Retained Annuity Trust “GRAT”
Objectives
- Generate meaningful transfer to beneficiary
- Preserve capital, to extent possible, while meeting primary transfer objective
- Endeavor to minimize taxation of Grantor
Principles
- Create homogeneity of asset mix within each GRAT
- Pursue diversification among GRATs
- Seek low correlation with other GRATs
- Introduce leverage and volatility
- GRAT-friendly characteristics
- Wealth transfer is essentially an option
- Unsuccessful strategy results in assets remaining in Grantor estate, i.e., no downside to Grantor