Wealth Management Update July 2018

July Interest Rates for GRATs, Sales to Defective Grantor Trusts, Intra-family Loans and Split Interest Charitable Trusts (Rev. Rul. 2018-16)

The July § 7520 rate for use with estate planning techniques such as CRTs, CLTs, QPRTs and GRATs held steady at 3.4%, which is the same as the June 2018 § 7520 rate. The July 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 semiannually) is 2.85%, up slightly from 2.84% in June.

The still relatively low § 7520 rate and AFRs continue to present potentially rewarding opportunities to fund GRATs in July with depressed assets that are expected to perform better in the coming years.