A favorite HNW technique when interest rates are low. Zero-tax "zeroed-out" GRATs can pass substantial appreciation to the next generation at virtually no gift-tax cost. Risk: if the grantor dies during the term, the assets come back into the estate.
Glossary · trusts
Grantor-Retained Annuity Trust
Acronym: GRAT
In plain English
An irrevocable trust you fund with an appreciating asset; you get back fixed annuity payments for a term, and anything that grows above the IRS hurdle rate passes to heirs gift-tax-free.