A GRAT can be a great way to transfer a business
Abstract: A grantor retained annuity trust (GRAT) can help a business owner minimize gift and estate tax liability associated with transferring ownership interests while retaining an income stream for a specified period of time. And it may be particularly powerful in the current economic environment, where the lifetime gift tax exemption is high and the value of a business may be lower than it was a few years ago. This article describes the nuts and bolts of this irrevocable trust, along with IRS rules on the trust instrument used to create a GRAT. A sidebar compares a GRAT with a grantor retained unitrust (GRUT) and grantor retained income trust (GRIT).