Kirk A. Hoopingarner quoted in article “A Trust Surges, Heirs and Taxes in Mind, but Mind the Details”The New York Times 07/22/11
Since the Republicans and President Obama allowed the gift- and estate-tax exemptions to rise to $5 million per person for this year and next, there has been a rush to pass far more money than that on to heirs, free of tax. In the case of charitable lead trusts, record low interest rates are driving the trend further.
The Internal Revenue Service sets what is called a hurdle or discount rate for these trusts, which is tied to United States Treasury rates. A lower rate means the payment to charity each year can be lower, and if the assets are invested to beat that rate, the amount left over for heirs should be higher.
The confluence of these factors comes as advisers are already bombarding their wealthiest clients with ways to pass money onto heirs, with good reason: the super-rich may be living through the greatest time for avoiding estate and gift taxes in recent memory.
“What’s the biggest bang for the buck?” asked Kirk A. Hoopingarner, a partner at the law firm Quarles & Brady in Chicago. “Everyone’s searching for that now. That’s why the charitable lead trust has gotten so much play.”
Originally published in The New York Times, July 22, 2011