Steve was a featured presenter at the 2005 Annual Conference of Attorneys for Family-Held Enterprises in Napa, California. His topic was “Zen and the Art of Zeroed-Out GRATs and Private Annuities.” The grail of estate planning has been to make a large gift and pay no gift tax. The $11,000 annual gift tax exclusions do not get us very far. The $1 million lifetime gift tax exemption gets us further, but often not far enough. Thanks to WalMart, a GRAT (Grantor Retained Annuity Trust) has become another device that we can use to make transfers at zero gift tax cost. Audrey Walton paved the way in the Tax Court after setting up two GRATs, each funded with $100 million of WalMart stock. The Tax Court agreed that any appreciation on the stock in excess of the applicable federal interest rate would pass to the beneficiaries gift tax-free. For example, if the stock increased by 20% over that hurdle rate, there could be $20 million in each GRAT that would pass to the beneficiaries free of gift tax and estate tax. The IRS has conceded, and now zeroed-out GRATs can be used to transfer appreciation on unlimited-sized holdings, including family business enterprises.