Slight Decrease in October 2017 7520 Rate

The 7520 rate for October 2017 will drop to 2.2%, down from 2.4% in September. A table showing historical 7520 rates since 2008 is here.

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September 7520 Rate Remains the Same

The 7520 rate for September 2017 will stay at 2.4%. A table showing historical 7520 rates since 2008 is here.

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August 7520 Rate Announced

The 7520 rate for August 2017 will go back to 2.4%. A table showing historical 7520 rates since 2008 is here.

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July 7520 Rate Announced

The 7520 rate for July 2017 will drop to 2.2%. This is the lowest rate so far for the year. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of […]

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June 7520 Rate Announced

The 7520 rate for June 2017 will remain at 2.4%. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of return. Source: Rev. Rul. 2017-12 (pdf) Posted by Joel D. […]

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PLR: CRUT Not Subject to Private Foundation Rules

Grantor executes a charitable remainder unitrust (CRUT). CRUTs are normally subject to certain private foundation rules. However, Grantor never claims an income tax or gift tax charitable deduction with respect to the trust. Is the CRUT still subject to the private foundation rules? A quick review of I.R.C. § 4947(a)(2) would suggest the answer is yes. It provides that: In the case of a trust which is not exempt from tax under section 501(a), not all of the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B), and which has amounts in trust for which a deduction was allowed under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522, section 507 (relating to […]

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Early Termination of CRTs

There is a high economic cost to terminating a charitable remainder trust (CRT) before the date specified in the trust. There are two primary tax issues associated with terminating a CRT early:  the excise tax on self-dealing and the excise tax on the termination of a private foundation (a CRT is treated like a private foundation for purposes of this tax). These issues can apparently be avoided by following procedures described in various private letter rulings (PLRs). However, a PLR is only binding on the person who requested it.  Thus these PLRs provide guidance only and may not be relied upon as precedential authority. According to the available guidance, a CRT can be terminated early if authorized under applicable state law.  […]

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Excess Distributions Prove Fatal (and Costly) for CRUT

A taxpayer, admittedly operating under bad advice from a financial planner and an attorney, nonetheless paid a steep price for failing to administer a charitable remainder unitrust (CRUT) properly. Grantor established a trust. He intended for the trust to qualify as a CRUT. He named himself as a co-trustee and initial beneficiary. The remainder beneficiary upon termination of the trust was, of course, a charity. The term of the CRUT was 20 years. During the term of years, the CRUT was required to pay Grantor, if living, otherwise a successor beneficiary “B”, a fixed percentage (presumably 5%) of the trust assets or the net income of the trust, whichever was lesser. If the net income in later years exceeded the fixed […]

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May 7520 Rate: the Trend Continues

All year, the 7520 rate has vacillated between 2.4% and 2.6%. The current 7520 rate is 2.6%. It will go back to 2.4% in May. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low […]

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The 7520 Rate for April Goes Back to 2.6%.

The 7520 rate for April 2017 is back to 2.6%. The rate has alternated between 2.4% and 2.6% all year. A table of recent rates is below. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of return. Source: Revenue […]

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March 7520 Rate Announced

The March 7520 rate is 2.4%. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of return. Source: Rev. Rul. 2017-7 (pdf) Posted by Joel D. Roettger, JD, LLM, EPLS

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7520 Rate Up Slightly in February

The 7520 rate for February 2017 is 2.6%. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of return. Source: Rev. Rul. 2017-4 Posted by Joel D. Roettger, JD, […]

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IRS Announces 7520 Rate for January 2017

The 7520 rate for January 2017 is 2.4%. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of return. Source: Revenue Ruling 2017-2 (pdf) Posted by Joel D. Roettger, JD, […]

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