Grantor retained annuity trusts (GRATs) were created in 1990 by the U.S. government to prevent another tax avoidance maneuver by wealthy investors. A tax loophole was found and exploited in the GRATs by renowned lawyer Richard B. Covey. Covey estimates that these legal tax shelters for the wealthy have cost the government around 100 billion in tax revenue since 2000. This tax avoidance scheme returns millions of dollars to the original investor and his/her family tax free. It should be termed abusive and illegal.
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