Insights: Article

Current IRS 7520 Rates

October 23, 2018

The IRS Section 7520 rate will increase to at 3.6% for November. 

Near Zero Out Grantor Retained Annuity Trusts, Sales to Intentionally Defective Grantor Trusts and Charitable Lead Annuity Trusts are attractive since interest rates are near historical lows.  

QPRT’s would be more attractive at higher rates, however, they do represent an asset that can be transferred by Clients who would like to use exemption and do not have other appropriate assets.  

Grantor Retained Annuity Trusts (GRATs), Charitable Lead Annuity Trusts (CLATs) and Private Annuities are positively affected by a decrease in the Section 7520 rate.

Grantor Retained Annuity Trusts (GRATs), Charitable Lead Annuity Trusts (CLATs) and Private Annuities are negatively affected by an increase in the Section 7520 rate.  

Qualified Personal Residence Trusts (QPRTs) and Charitable Remainder Annuity Trusts (CRATs) are negatively affected by a decrease in the Section 7520 rate.

Qualified Personal Residence Trusts (QPRTs) and Charitable Remainder Annuity Trusts (CRATs) are positively affected by an increase in the Section 7520 rate.

Charitable Lead Unitrusts (CLUTs) and Charitable Remainder Unitrusts (CRUTs) are not sensitive to the changing Section 7520 rate. 

The current estate planning environment makes this an opportune time to discuss transfer tax planning with a wealth management professional.

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