For those who would like to gift to loved ones, today may be the best gifting opportunity in 50 years.

The convergence of key factors make up these optimal conditions:

Historically low interest rates: Interest rates used in wealth-transfer strategies are now at a historic low, with the midterm applicable federal rate (AFR) at only .41% (3-9 years), and the long-term AFR at only 1.12% (9+ years) for August. This environment creates an opportunity with minimal tax consequences by using wealth-transfer tools that benefit from low rates, such as an intentionally defective grantor trust (IDGT), a grantor-retained annuity trust, and an intra-family loan.

Temporary increase in the gift and estate tax threshold: The current gift and estate tax exemption is $11.58 million per person. For a married couple, this means together they can give over $23 million to their loved ones. On January 1, 2026, this exemption will be cut in half to what will likely be less than $6 million. Additionally, many in Congress would like the exemption reduced even further, with proposals of $3.5 million. With an upcoming election, proactive planning is key to take advantage of this strategy while the exemption is still high.

Now, the next question is how to best transfer a trust? Clients may not want to give $1 million directly to his or her child or loved one due the risk of careless spending or a time of turmoil, such as divorce, bankruptcy, or a bad business deal. The good news is that clients can utilize various gifting trusts to both transfer wealth and protect it for generations to come.