what is a grantor retained annuity trust grat 
a grantor retained annuity trust grat is a financial instrument used in estate planning to minimize taxes on large financial gifts to family members under these plans an irrevocable trust is created for a certain period of time assets are placed under the trust and then an annuity is paid out to the grantor every year when the trust expires and the last annuity payment is made the beneficiary receives the assets and pays little or no gift taxes understanding grantor retained annuity trusts grats a grantor retained annuity trust is a type of irrevocable gifting trust that allows a grantor or trustmaker to potentially pass a significant amount of wealth to the next generation with little or no gift tax cost grats are established for a specific number of years 