GRAT is the acronym for grantor retained annuity trust-a technique in which a grantor transfers assets to an irrevocable trust, retains a fixed annuity for a term, and passes any remainder beneficiaries at low gift-tax cost if assets outperform the 7520 rate. GRATs are typically grantor trusts for income tax, and "zeroed-out" designs can minimize the reported gift. Early death risk and administrative rigor are key considerations.

Clients use short, rolling GRATs to capture market volatility. Advisors track 7520 rates and performance, then decide whether to refuel or end the GREAT cycle. Administration keeps payments on schedule and records complete.