Grantor retained annuity trust
Certified Financial Planner glossary · Certified Financial Planner
Definition
An estate freeze technique where the grantor retains an annuity and remainder appreciation may pass with reduced transfer tax cost if returns exceed the 7520 rate.
Grantor retained annuity trust in plain English
An entrepreneur with a surging private-company stake wants future appreciation out of the estate without writing a giant taxable gift today. A grantor retained annuity trust is an estate freeze: the grantor retains an annuity, and remainder appreciation may pass with reduced transfer tax cost if returns beat the Section 7520 rate. Proposing GRATs before liquidity, risk capacity, and goals are clear is premature recommendation. Freeze technique second; planning foundation first.
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