Although current economic conditions are not pretty, they provide an exceptional opportunity for estate planning. Now is an ideal time to consider GRATs, intrafamily loans, installment sales and other leveraged estate planning techniques that can take advantage of current low interest rates.
The IRS establishes minimum interest rates that must be used to avoid imputed interest for income and gift tax purposes. Low interest rates plus low equity values make it easier to transfer wealth to younger generations with little or no estate or gift tax. The following table shows how interest rates set by the IRS have dropped since January 2008.