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AFRs for May 2019: Lower 7520 rate of 2.8% presents planning opportunities
By Trusts & Estates Practice Group on May 1, 2019 at 4:10 PM

AFRs for May 2019The Internal Revenue Service has released the Applicable Federal Rates (AFRs) for May 2019. AFRs are published monthly and represent the minimum interest rates that should be charged for family loans to avoid tax complications.

Here are the rates for May 2019:

 

Annual

Semiannual

Quarterly

Monthly

Short-term

2.39%

2.38%

2.37%

2.37%

Mid-term

2.37%

2.36%

2.35%

2.35%

Long-term

2.74%

2.72%

2.71%

2.70%

   

The Section 7520 interest rate for May 2019 has dropped to 2.8 percent from 3.0 percent in April 2019. This is the lowest 7520 rate we have seen since February 2018 and may present some planning opportunities.

The Section 7520 interest rate is the interest used in a common estate tax planning technique called a “grantor retained annuity trust” or “GRAT.” In general, the lower the interest rate, the more effective the transaction is for reducing estate taxes.

For more information about GRATs and possibly taking advantage of this lower 7520 rate, please contact someone in our Trusts & Estates group.

Find the full revenue ruling for May 2019 here.

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