Consider Rates in Gift-Giving Strategies

The rise and fall of interest rates can impact gift-giving strategies, specifically charitable annuity trusts. There are several strategies that can help increase the amount of one's retirement.

"A lead trust could also provide more for your heirs. When rates are down, the growth in trust assets could outpace the IRS's upfront estimate, says David Handler, an estate-planning lawyer with Kirkland & Ellis, in Chicago. The 7520 rate, he says, 'is the rate of return the trust has to beat to leave money to the kids. With rates so low, it's not so hard to beat.'

Handler offers these examples: If you set up a $1 million lead trust using the May rate, but your trust assets actually grew by 6% over a 20-year term, $688,000 would be left for the kids, he says. If the assets grew by 8%, $1.5 million would be left."

This article appeared in its entirety in the June 2008 edition of Kiplinger's Retirement Report.