Grantor retained annuity trust (GRAT)

Last updated: April 18, 2025

You can model hypothetical GRATs within the Estate Waterfall. This guide outlines how to get started modeling this wealth transfer strategy.

  1. Getting started

    1. In a hypothetical waterfall, click on the Hypothetical transfers button and click Create hypothetical transfer.

    2. You will be prompted to select which strategy you want to model. Click on GRAT.

  2. GRAT details

    1. Enter a description for the transfer name (e.g. Fund 5 year GRAT).

    2. Select Create a new hypothetical GRAT (you may also select from an existing hypothetical GRAT).

      1. Upon clicking Create new hypothetical GRAT, you will be prompted to enter the GRAT assumptions and structure

  3. Transfer details

    1. Specify the GRAT funding amount.

    2. Specify the source entity to fund the GRAT from.

    3. Click Save Changes.

You will then be redirected to the diagram view of the estate waterfall with the hypothetical strategy displayed.

FAQs

What happens if the grantor dies before term-end of the GRAT strategy?

If the grantor dies prior to term end, the GRAT will distribute per the dispositive provisions entered. If no dispositive provisions are entered, the assets will remain in the GRAT.

What happens if the GRAT fails?

If a GRAT fails (e.g. insufficient funds to make annuity payments), the GRAT will cease to make any remaining annuity payments.

Can I model a rolling GRAT?

While we support modeling rolling GRATs for the purposes of generating a proposal, we currently do not support rolling GRATs in the estate waterfall.

If I funded a GRAT in 2025, when is the first annuity payment made?

The first annuity is assumed to occur 1 year after the initial funding.

Can I fund a hypothetical GRAT in the future?

We currently support current year funding, but plan to support future year funding of GRATs.