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Irvine, CA Estate Planning Blog

Monday, June 1, 2015

Opportunities created by our current historically low interest rates

Opportunities created by our current historically low interest rates

A WSJ article highlights the opportunities created by our current historically low interest rates. In How Low Rates Can Cut Your Tax Bill, Tax Report columnist Laura Saunders points out that our current low interest rates create several unique planning opportunities:

• Loans to family members –The author gives an example of a $100,000 loan from parents to a child and his spouse to buy a home: the parents could either collect annual interest or they could forgive the loan (up to $52,000 of debt forgiveness per year) in whole or in part.

• Installment Sales — with interest rates low, more of the sale counts as capital gain than interest income (i.e., ordinary income);

• GRATs — noting that we have seen proposals to eliminate short-term GRATs, combined with low interest rates, the author urges consideration of a strategy “sanctioned by the tax code”;

• CLTs — Charitable lead trusts are more likely to pass tax-free assets to beneficiaries when interest rates and asset values are low.  Given historically low interest rates and low asset values, lifetime CLTs are also worthy of consideration, particularly for charitably inclined clients.

The full article is available online.


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Law Offices Of Michael J. Wittick, A Professional Law Corporation is located in Irvine, CA and serves clients with estate and wealth preservation matters throughout Irvine, Lake Forest, Laguna Woods, Laguna Hills, Foothill Ranch, Tustin, Aliso Viejo and the surrounding areas.



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