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Sophisticated gifting strategies provide a method for transferring wealth with minimal tax consequences. Now is a great time to consider taking advantage of one of four attractive vehicles.

Two broadly accepted maxims can be applied to estate planning today; the first is that it is better to give than receive, and the second is that there is no time like the present. Particularly in an environment where some assets are still significantly diminished in value, expediting the gifting decision can ultimately reduce your exposure to gift and estate taxes — you can effectively remove assets from your estate, preventing further appreciation of those assets, while also exhausting less of your gift tax credit.
Another powerful timing consideration in terms of gifting is today’s record-low level of interest rates. With some estate planning vehicles, lower interest rates can reduce the value of gifts. Gifts of lesser value could result in greater use of the annual exclusion (currently $15,000 per grantor per year) and greater use of the aforementioned gift tax exemption (currently $11.58 million).

Overview

Four potential gifting strategies for consideration in this low interest rate environment are:
  • Intrafamily loans
  • Spousal Lifetime Access Trust (SLAT)
  • Grantor Retained Annuity Trusts (GRAT)
  • Charitable Lead Annuity Trusts (CLAT)
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