Intra-Family Loans: A Way to take advantage of low AFR Rates

In 2016, we saw a dip in Applicable Federal Rates (AFRs), which created a huge opportunity for high-net-worth clients to use intra-family loans and other strategies for wealth transfer. AFRs are the lowest interest rates clients can charge without causing a negative gift tax result when making a loan to family members. Intra-family loans allow wealth transfer to younger generations without using up the parent’s or grandparent’s lifetime gift tax exemption.

Rates in 2017 have increased, but are still low enough for HNW clients to take advantage. The time to act is now. As we discussed last year, advisors are missing opportunities for their affluent clients by not taking advantage of low AFR rates. These low rates won’t last.


AFR Rates are still low in April

Don’t wait until it’s too late. Contact your Mercury Financial Group Planning Specialist to find out how low AFRs can benefit your affluent clients through wealth transfer and advanced insurance strategies.