Along with general market interest rates, IRS interest rates used to value gifts through leveraged gifting techniques are on the rise. For example, the IRS Section 7520 rate, which is the rate used in several techniques, is projected to rise more than 40% from the July rate of 1.4% up to 2.0% or 2.2% in August — an unusually large jump. This means there is a window of opportunity to take advantage of the historically low rates that will still apply to gifts completed before the end of July. The techniques that will be adversely affected in August include GRATs, Low Interest Loans and Sales to Grantor Trusts. For more details on these techniques you may want to review our newsletter from March 2008.

Even in August, we anticipate that the IRS interest rate will be lower than has been the case in most years, but we may not see the particularly low July rates again for a long time.

As the March 2008 newsletter describes in more detail, leverage gifting typically works best when stock market valuations are also low. Any evaluation of current gifts should take into account current valuation levels for the assets in question.