Over the past month, fear surrounding the continued spread of
the coronavirus (COVID-19) and a global financial crisis, have
caused deep dips in the stock market. On February 20, 2020, the
S&P 500 opened at 3,380.45. A little over a month later, on
March 23, 2020, the S&P 500 had dropped 33.8 percent, closing
at 2,237.40. Although drastic drops in the stock market can cause
investor panic, they also present unique estate planning
opportunities for gifting assets with reduced values. A
particularly useful gifting vehicle in this economic environment is
a GRAT.
A Grantor Retained Annuity Trust (GRAT) is an irrevocable trust
funded with a single contribution of assets, which pays back to the
grantor a percentage of the initial contribution (the annuity) for
a term of a minimum of two years and then distributes the assets
remaining at the end of the term to beneficiaries other than the
grantor.
