Wealth Management Update - August 2015

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

The August §7520 rate for use with estate planning techniques such as CRTs, CLTs, QPRTs and GRATs is 2.2%, the same as July. The August applicable federal rate ("AFR") for use with a sale to a defective grantor trust, self-canceling installment note ("SCIN") or intra-family loan with a note having a duration of 3-9 years (the mid-term rate, compounded annually) is 1.82%, up .05% from July.

Lower rates work best with GRATs, CLTs, sales to defective grantor trusts, private annuities, SCINs and intra-family loans. Based on recent statements by Janet Yellen, it appears likely that the Federal Reserve will reduce its bond purchasing policy and take other measures to increase interest rates toward the end of 2015. The current AFR, which is well below its historical average, presents a potentially rewarding opportunity to fund GRATs and sell assets