Lawyers Tweak
Since Covey’s triumph in the Walton case, lawyers have tweaked his technique to generate even more tax savings. One idea, used by former Aetna Inc. CEO John W. Rowe, puts corporate stock options into a GRAT.
Another, championed by Goldman Sachs banker Stacy Eastland in presentations at estate-planning conferences, envisions a husband funding a GRAT with the proceeds of an options bet with his wife.
“It’s very common,” Rowe says, referring to the use of GRATs. “It’s become standard practice in estate planning.”
Charles Dolan, whose family controls the New York Knicks basketball team and who is chairman of Cablevision Systems Corp., has repeatedly swapped Cablevision shares out of his GRATs and replaced them with IOUs, his SEC filings show.
The technique multiplies the potential tax savings, according to a 2008 report by analysts at AllianceBernstein Holding LP. Through a spokeswoman, Dolan declined to comment.