The process of substituting nonvolatile asset for highly appreciated assets inside a GRAT (grantor retained annuity trust). For example, if you establish a two year GRAT to hold financial equities and after 18 months realize a 35% appreciation. In order to lock in that gain, you as the grantor may use a power to substitute (assuming this power was given to you under the trust document, and typically it is in order to assure grantor trust status) to substitute Treasury bills or cash for these more volatile equities in order to avoid any decline in value inside the GRAT. Note, if you opt for a longer term GRAT, you probably should not immunize the GRAT with cash or near cash items if there are years to run for the GRAT. In such instances you might prefer to immunize with a conservative asset allocation instead.
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