A grantor retained annuity trust (GRAT) transfers appreciating business interests to heirs with little or no gift tax if the asset outperforms the IRS rate during the trust term. An intentionally defective grantor trust (IDGT) involves selling business interests to a trust in exchange for a promissory note, freezing the value in your estate while future appreciation grows outside it. Both are most effective if implemented years before a sale, and the suitable choice depends on your growth expectations and cash flow needs.
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