Interest Rates and
April 13, 2008

Elevators are up, mine shafts are down and envelopes remain "stationary". The vagaries of the stock market and the federal interest rates! Last time we discussed the fact that lower stock values can aid in estate planning because gifted shares are less ?valuable?. This time the falling federal interest rates are helping matters. The grantor retained annuity trust (?GRAT?) is a wonderful tool to make tax ?free? gifts. It is a tool for those who are already making annual gifts of $12,000 to family members, paying tuition and/or medical bills. There is little downside to a GRAT and a whole lot of potential upside. The size of the taxable gift when made through a GRAT (particularly in this low interest rate climate) is reduced considerably as it is offset by the annuity that is returned to the grantor. The play is to offset the gift component with the retained annuity interest component. Your tax advisor can help you explore the options.

If you have questions, please contact:
Charles B. Jones, Esquire

cjones@tandllaw.com
(410) 952-2468