Creative Use of a GRAT and Preferred Partnership Planning

N. Todd Angkatavanich (attorney, Connecticut) and Karen E. Yates (attorney and partner, Connecticut) have published their article entitled The Preferred Partnership GRAT–A Way Around the ETIP Issue, 35 ACTEC Journal 289 (2009).

The editor’s synopsis of the article is below:

A disadvantage of GRATs is that GST exemption probably cannot be allocated to them until the end of the GRAT term.  This article suggests a creative way to combining preferred partnership planning with GRAT planning to ameliorate some of that disadvantage for situations in which a high growth investment can produce significant cash flow.  Preferred interests are ultimately contributed to a GRAT and the “common” interests are owned by a GST exempt trust.