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​Multifaceted Planning with Grantor Retained Annuity Trusts (GRATs) Holding Concentrated Asset Positions, and a Charitable Lead Trust (CLT) in a Low-Interest Rate Environment

A very successful client with a net worth of approximately $250 million was interested in planning that would allow him to transfer assets to his family without using his lifetime exemption. The Quarles team illustrated a variety of grantor retained annuity trust (GRAT) alternatives, including funding multiple GRATs with concentrated stock positions. Ultimately, the client established eight such GRATs that were funded with stock in different industries, thereby reducing the risk of dilution of GRAT performance due to underperformance of any one position. As the GRAT payments are made, the client rolls them into another GRAT, with the result of passing millions of dollars to his children without paying any gift tax or using his exemption. We illustrated for the client the benefits of creating a charitable lead trust in a low-interest environment to accomplish his desire to benefit his university over a term of years, with substantial value ultimately passing to his family.