For the mega wealthy, establish a long-term dynasty trust for several generations, using both the high gift tax exclusion and generation-skipping transfer tax exemption.
Married couples who want to make a gift but are unsure of future economic circumstances can make a lifetime gift trust that includes the spouse as a permitted beneficiary.
Opportunities also exist for establishing certain trusts and making family loans. The historically low Tax Code Section 7520 rate makes charitable lead annuity trusts and grantor retained annuity trusts attractive, they said. And the low Applicable Federal Rate, which is used to set threshold interest rates for family loans, make this a good time to make family loans and to make sales to defective grantor trusts.
For investors who wonder whether now is a good time to realize long-term capital gains to reset the cost basis of a portfolio while rates are low, Shier said Northern Trust research suggests tax deferral outweighs the benefits of realizing appreciated capital gains in a lower tax rate environment. But other factors may influence individual decisions, such as short-term cash needs, short-term investment horizon or low future return expectations, they said.
-Michael S. Fischer