Interest Rates and Gift Planning | Sharpe Group
Posted February 6th, 2020

Interest Rates and Gift Planning

I’m a tax lawyer, not an economist, but in my experience and thinking, interest rates play a far bigger role in gift planning than tax laws.

Back in the early 1980s, when interest rates were sky-high, practically no one wanted a gift annuity. Those were the hey days of pooled income funds.

Today, in an environment of low interest rates, low inflation and a surging stock market, gift planning is much different from the early 1980s.

What I see these days is:

    • a fair amount of gift annuity traffic,
    • a fair amount of real estate and CRUT traffic and
    • a lot of interest in using IRA assets to make gifts

Which brings us to the total return pooled income fund. This is a PIF that pays out all of its  ordinary income plus all of its realized capital gains.

I don’t know of a charity that has such a PIF. IRS regs expressly approve such a PIF. It seems to me to make sense given the surge in the stock market. I believe that for some charities it would have a lot of marketing appeal.

By Jon Tidd

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