September 7520 Rate Remains Low
Federal interest rates for September (pdf) are still very, very low. The Section 7520 rate remains at 3.4% for a third month in a row. Likewise, applicable federal rates remain low -- the mid-term rate (a 3 to 9 year term) is 2.87% (annual compounding).
Individuals who want to take advantage of low interest rates and low asset values should consider using one or more of the following estate and gift tax planning vehicles:
- a grantor retained annuity trust (a "GRAT")
- an installment sale to a grantor trust
- a qualified personal residence trust (a "QPRT")
- a charitable lead annuity trust
There is talk among some estate planning commentators that we are unlikely to see legislation enacting a 10-year minimum GRAT as proposed in the Greenbook. These commentators explain that the ten year minimum can be easily defeated by using a steeply declining GRAT.
