Wealth Management Update

April Interest Rates for GRATS, Sales to Defective Grantor Trusts, Intra-Family Loans and Split-Interest Charitable Trusts

The April Section 7520 rate for use with estate planning techniques such as CRTs, CLTs, QPRTs and GRATs is 5.0%. The April applicable federal rate ("AFR") for use with a sale to a defective grantor trust or intra-family loan with a note having a duration of:

• 3 years or less (the short term rate, compounded annually) is 4.86%;
• 3 to 9 years (the mid-term rate, compounded annually) is 4.15%; and
• 9 years or more (the long-term rate, compounded annually) is 4.02%.

The Section 7520 rate and the AFRs have been steadily rising with inflation although the rates are still relatively low. Clients contemplating any type of transaction whose success depends on these "hurdle rates" may wish to proceed sooner rather than later.