1. UPDATE
LOW RATES
CREATE ESTATE
PLANNING
OPPORTUNITIES
T H E B U S I N E S S o f P R E S E R VAT I O N

2. Low Rates Create Estate Planning Opportunities
 Loans between family members, LLCs, Trusts, or
other entities have long been an important tool in
estate planning
planning.
 Interest paid at Applicable Federal Rates (AFR)
avoid gifts and allows the borrower to invest
principal-generating, estate tax-free returns.
 The extended low interest rate environment has
lowered AFR rates to the lowest level ever seen.
 Many structures exist to allow wealthy families to
take advantage of this leverage with great results.
 With estate taxes scheduled to increase and
t t t h d l dt i d
exemptions set to decrease, NOW is a good time
to evaluate these alternatives.
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3. Low Rates Create Estate Planning Opportunities
IRS Releases Applicable Federal Rates (AFR) for July 2012
Mid-Term & Long-Term AFR at ALL-TIME LOWS
This week, the IRS published
y
the AFR for July 2012. These
14.00%
rates are commonly used as a
benchmark rate of interest in 12.00%
many estate planning Mid-Term Long-Term
techniques – including private 10.00%
10 00%
loans and installment sales.
8.00%
It’s worth noting that the Mid-
6.00%
Term annual AFR of 0 92%
0.92%
marks an historic low. It is the 4.00%
first time this rate has fallen
below 1% in more than 20 years 2.00%
of publication The Long-Term
publication. Long Term
0.00%
annual rate is also at its lowest
point ever at 2.30%.
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4. T H E B U S I N E S S o f P R E S E R VAT I O N
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