The sex-trafficking scandal surrounding the late Jeffrey Epstein already has tarnished the reputations of prominent politicians, businessmen, and the British royal family. Now it’s casting a dark shadow on an estate tax-avoidance strategy popular among Wall Street CEOs and tech entrepreneurs.

The strategy exploits a loophole that Congress unintentionally left open when it passed provisions related to grantor retained annuity trusts, or GRATs, in 1990. Use of these trusts already has cost the IRS—by one estimate—well over $100 billion in just the last two decades. A recent filing with the Securities and Exchange Commission by the private equity firm Apollo Global Management reveals that the firm’s longtime CEO, Leon Black, relied on Epstein’s assistance to extract more than $500 million of tax savings from GRATs.

GRATs—which combine a trust and an annuity to generate supercharged tax benefits—are entirely legal. But they make no sense from a policy perspective, and they only work because Congress in 1990 enacted a valuation formula that defies economic reality. While GRATs aren’t responsible for Epstein’s predation, the appearance of GRATs in the most recent Epstein revelations is one more reminder that Congress and the Biden administration should scrap this tax shelter.

According to the report of an outside law firm hired by Apollo, Epstein advised Black on a range of matters between 2012 and 2017, generating $158 million in fees. The “most valuable piece of work Epstein provided Black,” according to the report, concerned a GRAT that Black had set up several years earlier.

Epstein wasn’t the only financial advisor helping high-net-worth individuals set up GRATs, and Black isn’t the only one to take advantage. The strategy surged in popularity after a 2000 decision by the U.S. Tax Court rejected an IRS challenge to the Walton family’s aggressive use of GRATs. Following the Waltons’ lead, thousands of others—including Facebook founder Mark Zuckerberg and JPMorgan Chase CEO Jamie Dimon—have used GRATs to cut their gift tax and eventual estate tax liabilities.

Two of the most masterful users of GRATs are Zoom founder Eric Yuan and the late casino magnate Sheldon Adelson. SEC filings indicate that Yuan saved more than $2 billion with well-timed transfers to two GRATs around the videoconferencing company’s April 2019 IPO. Adelson, a major Trump donor who died last month, reportedly reduced his family’s tax liability by about $2.8 billion through GRATs.

Here’s how it works. To set up a GRAT, an individual—called a “grantor,” and almost always a multimillionaire or billionaire—makes a gift to a trust with a string attached. The string is that the trust must make a series of payments—a “retained annuity”—back to the grantor for several years. After the several-year period is over, the trust’s assets go to its beneficiary, which is usually another family trust set up for the grantor’s children and grandchildren.

A 1990 law allows the grantor to calculate her net transfer for estate and gift tax purposes by subtracting the value of the retained annuity from the amount that goes into the trust. Since these annuity payments happen in the future, Congress needed to set an interest rate that would be used to calculate the annuity’s present value. Congress’s error was to tie the rate to the interest rate on U.S. Treasury bonds. For February 2021, the interest rate for GRATs is just 0.6 percent.

The low interest-rate assumption gave rise to an easy planning opportunity. Wealthy individuals can stuff their GRATs with high-risk, high-growth assets that are likely to generate returns well above the Treasury rate. On top of that, they can structure their GRATs such that the present value of the annuity exactly equals—or “zeroes out”—the value of the transferred assets, resulting in a net gift of zero.

The upshot is that if assets in the zeroed-out GRAT grow faster than the Treasury-based rate, the GRAT will have money left over after it’s done paying out the annuity, and that money will go to the GRAT’s beneficiary free of any gift tax. If GRAT assets grow slower than the Treasury rate or dip in value, the trust will run out of money before it makes all of its annuity payments. The trust will cease to exist, and no one will owe any tax. From the grantor’s perspective, this is a heads-I-win, tails-we-tie bet with the IRS.

Recognizing what a problem GRATs had become, President Obama repeatedly asked Congress to clamp down on these tax-avoidance trusts. After President Obama left office, Senator Bernie Sanders (I-Vt.) and Rep. Jimmy Gomez (D-Cal.) picked up the mantle of GRAT reform and introduced legislation that would shut down the strategy that the Waltons pioneered. But President Trump—who owes much of his fortune to transfers that his father made to him using GRATs—showed no interest in fixing the problem, and the Sanders-Gomez bill stalled under divided government.

Hopefully, the latest Epstein revelations will put GRATs back on the tax reform agenda. The easiest fix would be simply to repeal the 1990 law that allows GRATs to exist. Taxpayers who desire the steady stream of income that comes from an annuity can continue to buy those products from insurance companies. It’s only ultra-rich taxpayers who are using annuities as an estate tax avoidance strategy who would be affected.

GRATs are not the most infuriating aspect of the Epstein saga, in which dozens of prominent individuals and institutions actively abetted or turned a blind eye toward Epstein’s deeds. But by shining another spotlight on GRATs, the Epstein revelations remind us of the continuing damage from a tax shelter that never should have been allowed in the first place.

Daniel Hemel is a law professor at the University of Chicago. Bob Lord is a Phoenix tax attorney and associate fellow at the Institute for Policy Studies.

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