Planning in a Low Interest Rate Environment
April 10, 2012Although the future of the estate tax is murky at best, the present continues to be an appropriate time to take advantage of certain wealth transfer strategies. The interest rates in March remain historically low, and the Section 7520 rate remains unchanged from February at 1.4%. One technique that works extremely well in this environment is the grantor retained annuity trust, or GRAT. A GRAT is an irrevocable trust into which the grantor, or creator of the trust, transfers assets and retains the right to receive, at least annually, an annuity amount for a specified term. At the end of the term, the remaining assets in the trust pass to the grantor’s designated beneficiaries tax-free. The annuity payments paid back to the grantor from a GRAT established today are calculated based on the 1.4% Section 7520 interest rate. The benefit of this low interest rate environment is that, if the assets transferred to the GRAT grow at a rate greater than 1.4%, the GRAT becomes a powerful tool for passing assets to the designated beneficiaries without incurring significant gift or other transfer taxes.
Ms. Bentley on Google+.
Allison B. Bentley was born in Marietta, Georgia, and joined the firm in 2011 as a member of the Estate Planning and Tax Group. Ms. Bentley focuses her practice on sophisticated estate and taxation planning, probate and trust administration, charitable planning, and business transactions.
Ms. Bentley earned her Juris Doctor degree in 2010, with honors, from... Read More
no responses to "Planning in a Low Interest Rate Environment "
Leave a Reply Your email address will not be published. Required fields are marked *