The second largest owner beneficial owner of Garmin stock, son of the founder of the company, has made some hefty transactions this fall, totaling more than $19 million.
Jonathan Burrell, whose father is Gary Burrell, founder of Garmin International, has ownership of more than 27 million shares of the company, as reported in filings with the SEC dated September 13. A large portion of that stock is held through various family trusts, and Jonathan Burrell is a trustee for many of these trusts.
The Kansas City Business Journal’s recent report, “Founder's son moves more than $19M in Garmin stock,” says that in September, Burrell made four insider transactions: On Sept. 1 he moved 844,800 shares from several grantor-retained annuity trusts (GRATs) created by his mother, Judith Burrell, into her revocable trust. He’s a co-trustee for both of those trusts.
Burrell sold 127,000 shares on September 11 from the grantor-retained annuity trusts (GRAT) for a total value of $6.64 million. A day later, he sold another 127,000 shares. Finally, on September 13, Burrell sold another 126,000 shares. That adds up to a total of about $19.83 million in stock.
The grantor-retained annuity trusts—or “GRATs”—are an estate planning tool used to retain the right to get back assets over time.
Estate planning attorneys will tell you that the assets that are put in will appreciate rapidly, and the more appreciation there is, the more will pass through free of estate and gift tax to beneficiaries. A liquidation of assets within the GRAT could be due to an investment decision to sell that particular stock and isn’t necessary for the trust itself.
The term for Burrell’s GRATs isn’t given, but once the annuity term ends, the remaining assets can be distributed free of gift taxes. However, in the event that the donor doesn’t survive the annuity term, some of the assets would be subject to the estate tax. In some instances, a shareholder might create multiple short-term GRATs of about two to eight years to close as many as possible. More than 10 million shares are in the GRATs established by Judith Burrell, according to the SEC filing.
Gary Burrell is quiet about his role as a philanthropist, but he has donated large amounts–more than $50 million one year–to charitable organizations. There are several charitable lead annuity trusts that hold 8.7 million Garmin shares. These are structured to distribute funds to charities for a specific amount of time and then, if the investment returns are better over time, the remainder will pass to beneficiaries free of any taxes.
Speak with an estate planning attorney to see if GRATs might be useful for your estate planning.
Reference: Kansas City Business Journal (September 25, 2017) “Founder's son moves more than $19M in Garmin stock”