Have Clients Take Advantage of Low Rates Before Year End

Applicable Federal Rates (AFRs) are the lowest rates clients can charge family members without causing a negative gift tax result when engaging in intra-family sales or making intra-family loans. Financial advisors can incorporate strategies for high-net-worth clients with these types of sales or loans that can create:

  • Huge opportunities to transfer wealth via rate Arbitrage
  • Ways for high-net-worth clients to transfer assets to family without generating Gift Taxes OR Generation Skipping Taxes (GST)
  • Options to shift wealth when clients have either used up their lifetime exemptions and/or want to be able to unwind the strategy in the future

The IRS has published AFRs (applicable federal rates) for January 2017. We saw these rates take a substantial dip in August, and while still low throughout 2016, rates will increase substantially in 2017. It important that clients who should take advantage of low interest rates act immediately. Take a look at the ARFs throughout the year below.

January 2017 AFR Rates

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