The Perfect Storm: There May Never be a Better Time to Transfer Assets to Younger Generations

A perfect storm usually conjures up bad thoughts. But right now there is a rare combination of economic events that could be a perfect storm for doing estate planning and transferring assets to younger generations.

We know all too well that market values are still down from a historical perspective. This is a great time to get these assets in the hands of the younger generation so the appreciation belongs to them and is out of your estate.

The other economic anomaly right now is historically low interest rates. The good news about these interest rates is that the IRS uses these rates as well when they determine what a fair rate of interest should be for family transactions.

Imagine if you could combine the power of these two economic events! You can! You will need to just use a few different techniques in your overall estate plan. Consider establishing the following:

  • Grantor Retained Annuity Trust (GRAT)
  • Sale to an Intentionally Defective Grantor Trust (IDGT)

Both of these techniques take advantage of the low values and the low interest rates to hit an estate planning home run and get assets to your children at minimal tax cost, if any.

Think this is too complicated (it isn’t) for you? Even something as simple as loaning money to your children or grandchildren to give them a head start on life would take advantage of these favorable times and be a small silver lining in the economic clouds.

  • I found your blog on MSN Search. Nice writing. I will check back to read more.

    Eric Hundin