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Nike’s Founder Used This Trust to Move Billions to His Heirs. Here’s How It Works

A person in a black suit jacket and white striped shirt sits at a dark desk, holding a black pen over a stack of white documents. Their hands are visible, one holding the pen and the other resting on papers. A wooden gavel with a brass band is placed on the desk to the left of the documents.

Nike’s Founder Used This Trust to Move Billions to His Heirs. Here’s How It Works

Published: by Mike Barrington

Quick Read

  • The sales pitch frames GRATs as nearly risk-free for the person who creates them, yet retirees face one specific scenario where the entire tax benefit can vanish and the assets boomerang back into the taxable estate.
  • Bloomberg's $9.3 billion headline about Phil Knight's estate plan is technically accurate while being almost entirely misleading about how the strategy actually worked.
  • A GRAT only outsmarts the IRS if your investment clears one specific government-set benchmark, and most investors would be surprised by how high that bar currently sits.

  • Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first. Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today.

Phil Knight’s estate plan gets attention for an obvious reason: the numbers are enormous. Bloomberg Businessweek reported in 2021 that it identified about $9.3 billion in Nike shares and other assets moved to Knight’s descendants through several estate-planning techniques. Grantor Retained Annuity Trusts, better known as GRATs, were a major part of that strategy.

But the useful lesson is not that every investor should copy a billionaire. For retirees and near-retirees, the better question is whether a GRAT can move future appreciation out of a potentially taxable estate while still returning substantial value to the person who created the trust. Sometimes it can. But this is a specialized estate-planning tool, not a tax shortcut for the average household.

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How a GRAT Actually Works

Here’s the basic move. You place an asset with strong growth potential into an irrevocable trust and keep the right to receive fixed annuity payments for a set term. The IRS values that retained interest using the Section 7520 rate, which is 5.2% for August 2026. If the trust’s assets grow faster than that assumed rate, the excess can pass to the beneficiaries at the end of the term with little or no additional gift-tax value. If the investment disappoints, the tax strategy may produce little or no benefit, but you still have legal, administrative, and investment risk. The goal is transfer-tax efficiency, not making the investment itself tax-free.

Why Phil Knight Is the Case Study

Phil Knight is a useful example, but the numbers need some context. Bloomberg Businessweek reported in 2021 that it could identify about $9.3 billion in Nike shares and other assets moved to Knight’s descendants through several estate-planning techniques. GRATs were a major piece of that plan: the report said nine GRATs transferred Nike shares then worth about $6.1 billion to heirs, while two other GRATs received roughly $970 million of unspecified assets. SEC filings also document Knight using multiple grantor retained annuity trusts over several years. That is different from saying one trust moved $9 billion with a documented $0 gift-tax bill.

A person in a black suit jacket and white striped shirt sits at a dark desk, holding a black pen over a stack of white documents. Their hands are visible, one holding the pen and the other resting on papers. A wooden gavel with a brass band is placed on the desk to the left of the documents.
Indypendenz / Shutterstock.com

Who Should Even Be Looking at This

This is not a trust most retirees need just because they own appreciated stock. For 2026, the federal estate and gift tax basic exclusion is $15 million per person, and the annual gift-tax exclusion remains $19,000 per recipient. For many households comfortably below the federal estate-tax threshold, simpler estate planning may matter more. A GRAT starts to become more interesting when a family has substantial wealth, a concentrated stock or business position with significant upside, and a real transfer-tax problem to solve. It can also matter when future growth could push an estate higher, but the potential tax savings still have to justify the cost and complexity.

The Risks Matter More Near Retirement

The sales pitch makes GRATs sound almost one-sided. They are not. If the assets fail to outperform the IRS rate, there may be little or nothing left for heirs after the annuity is paid. If the grantor dies during the GRAT term, some or all of the trust value can be pulled back into the taxable estate under federal estate-tax rules. And because a GRAT is generally treated as a grantor trust for income-tax purposes, the grantor may remain responsible for tax on trust income during the term. For retirees, that makes cash flow and liquidity part of the decision, not an afterthought. A transfer-tax win still has to work inside the rest of the retirement plan.

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