Wealth Management Update - August 2011

August Interest Rates for GRATs, Sales to Defective Grantor Trusts, Intra-Family Loans and Split Interest Charitable Trusts Continue Decline

The August applicable federal rate ("AFR") for use with estate planning techniques such as CRTs, CLTs, QPRTs and GRATs is 2.2%. This is down from the July rate of 2.4%. The rate for use with a sale to a defective grantor trust, self-cancelling installment note ("SCIN") or intra-family loan with a note of a 9-year duration (the mid-term rate, compounded annually) is also down slightly, to 1.89%. Remember that lower rates work best with GRATs, CLATs, sales to defective grantor trusts, private annuities, SCINs and intra-family loans. The combination of a low AFR and a decline in the financial and real estate markets continues to present a potentially rewarding opportunity to fund GRATs in August with depressed assets you expect to perform better in the coming years. However, the Obama Administration, in its 2012 fiscal budget, has