Grantor retained annuity trust guide
A grantor retained annuity trust, usually called a GRAT, is reviewed when a grantor wants to transfer assets while keeping the right to receive a fixed annuity for a stated term. It is an advanced retained-interest trust because the valuation assumptions, annuity design, and term length all matter to the planning result.
Last reviewed: March 9, 2026
Reviewed against: trust and estate planning references listed on the sources page.
Publisher: Larry Trustee AI Editorial Team | hello@larrytrustee.ai
How a GRAT is usually structured
The grantor transfers assets into the trust and retains the right to receive a fixed annuity amount during the term. If the grantor survives the term and the trust assets outperform the retained annuity assumptions, the remainder may pass to beneficiaries under the trust design.
Why people compare GRATs with other advanced trusts
- To compare fixed-annuity retained-interest planning with a GRUT.
- To review whether the retained-interest approach fits the family transfer strategy.
- To compare gift planning outcomes with other advanced structures like grantor trusts.
- To evaluate how term length and asset volatility change the planning results.
What should be reviewed before using one
- Whether the annuity term and payout design are practical for the grantor.
- Whether the assets being transferred fit a retained-interest trust structure.
- Whether survival risk and valuation assumptions are acceptable.
- Whether a GRAT or GRUT is the better fit for the intended outcome.