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Wealth Transfer Strategies for Private Clients

GRAT chart

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