Rolling Grantor Retained Annuity Trust

Rolling Grantor Retained Annuity Trust

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Rolling Grantor Retained Annuity Trust

Rolling Grantor Retained Annuity Trust definition:  A rolling grantor retained annuity trust is a strategy of successive investments in GRATs (see grantor retained annuity trust defintion) with short time horizons. The grantor’s fixed annuity payments are used to fund new GRATs. At the end of each trust term, the remainder is transferred to beneficiaries. The rolling strategy takes advantage of short-term market volatility by allowing beneficiaries to capture appreciation of the assets. The strategy also maximizes the transferral of wealth to beneficiaries gift and estate tax free. (There is an increased chance of death of the grantor during a longer time horizon; thereby nullifying the purpose of the trust to avoid estate taxes.)

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