Janet Yellen this…. Janet Yellen that – good for business, bad for savers. In March 2015, the rates the IRS requires be used for estate planning are as low as ever. There are three estate planning opportunities that thrive on low rates you should consider NOW.

  1. Taxpayers can loan their children or anybody else any amount of money at 1.46% per annum for a term of 3-9 years. It can even be a "balloon loan," for which the child or other borrower does not have to pay back anything for nine years. The interest rate is even less for a loan of less than three years and a little more for a loan of more than nine years. Those who have children who need money to buy a house, pay college tuition or start a business should consider this option.
  2. Clients have been forming estate planning trusts in the form of GRATs (grantor retained annuity trusts) and transferring significant amounts to their loved ones while retaining an annuity stream. When properly formed, none of their estate or gift tax exemptions are used by setting up a GRAT. The lower the interest rate, the better these work. This is the perfect time to create a GRAT. The Obama administration has these on its "hit list" so waiting may not be prudent.
  3. For those who want to benefit a favorite charity or private foundation for a period of time and have the rest of the money go to loved ones, a CLT (charitable lead trust) is an excellent option, as CLTs work best when interest rates are low.

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