GRANTOR RETAINED ANNUITY TRUST - GRAT

Estate planning method minimizing the tax liability that exists when intergenerational transfers of estate assets appear. A special type of irrevocable trust is created for a particular term or time period. The individual forming the trust pays a tax in the event the trust is established. Assets are placed under this trust and an annuity is paid out annually. When the trust reaches its maturity, the beneficiary gets the assets tax-free.