John Rowe figured he could handle the IRS. After getting advice from a law firm and a financial planner, the wealthy executive chairman and CEO of Aetna Inc. set up a scheme that would transfer millions of dollars to his family while minimizing the gift taxes the family paid Uncle Sam.
Rowe took nonqualified stock options worth an estimated $28.5 million and placed them in two “grantor retained annuity trusts” (GRATs) in 2003. These trusts would pay Rowe an annual income for a set period, and whatever was left in the trust after that time would go to Rowe’s family. This stratagem would produce dramatic gift-tax savings.
