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Financial Advisor Magazine

Head of Family Wealth Services’ Jeremiah Barlow on Why Now Is The Optimal Time To Gift To Loved Ones

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.

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