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A Grantor Retained Annuity Trust (GRAT) is an irrevocable Trust into which you place income producing property such as cash, stocks, bonds, mutual funds, and real estate.  No additional contributions can be made to the GRAT after the initial contribution is made. You, as the grantor of the trust, retain the right to receive specific payments over a specific period of time.  At the end of the time period, the assets of the trust, whatever they are worth, pass tax free to your children.  The payment amount is expressed either as a fixed dollar amount or as a percentage of the initial amount that you place in the trust.

The primary reason for setting up a GRAT is to