a post-1990 trust that pays the grantor a fixed payment annually; the value of the grantor's retained interest can be taken into account in reducing the value of the gift to the remaindermen, if the GRAT requirements are met
an irrevocable trust in which the grantor retains the right to receive an annuity for a fixed term, at which time the remaining trust assets pass to the remaindermen, or to trust for their benefit, without any further gift tax implications
Grantor Retained Annuity Trust. Grantor places an income producing asset into an irrevocable trust, but retains the right to a fixed annuity return for an income until the trust terminates in a fixed number of years. At the end of the term of years, the property passes to the remainder beneficiaries, in most cases the children. The present value of the amount passing to remainder persons is taxable for gift tax purposes, but this tax is a small fraction of the value they will eventually receive.