Jonathan Burrell of Kansas City is listed as the second-largest beneficial owner of Garmin stock with about 14.5% of outstanding shares. He has total beneficial ownership of more than 27 million shares, according to a September 13 filing with the SEC. Much of this stock is held by various family trusts. Burrell is a trustee of many of these family trusts.
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 avoid that possibility. More than 10 million shares are in the GRATs established by Judith Burrell, according to the SEC filing.
A portion of the shares (8.7 million) are in several charitable lead annuity trusts. These trusts will disburse funding to charity for a set amount of time. If the investment returns are better over time, the remainder passes to beneficiaries tax-free. It’s not clear who the charitable beneficiary is here; although Gary Burrell has donated a large amount—over $50 million in one year—he’s been silent about his philanthropy.
Reference: Kansas City Business Journal (September 25, 2017) “Founder's son moves more than $19M in Garmin stock”