Maybe it’s a good time to do GRATs, and maybe they really won’t work so well. Financial commentators in Forbes, Barron’s, and other publications, and in online sites like TheStreet.com and Bloomberg.com, have been talking about something called an “inverted yield curve” since last summer. Basically, they all explain that the yield curve is the relation between short-term and long-term Treasuries, and when the long-term rate is higher, that’s good, but when the long-term rate drops below the short-term rate, that’s an inversion and an inversion is considered by some to be a predictor of a recession. Apparently, however, it’s not always clear that an inversion truly signals a recession. There have been a couple of times over the last 40 years that there has been an inversion and no recession followed, but there have been almost a half-dozen times when it did.
I don’t know. Certainly, however, it signals that your financial advisors – or, if you are an attorney, CPA or other professional, your clients’ financial advisors – probably should be consulted as you move forward.
Nevertheless, remember GRATs are virtually failsafe. If assets inside go up in value faster than the 7520 rate, you “win” and make a gift to the remainder beneficiaries with only limited (or no) gift tax impact. If assets inside don’t go up faster, you end up with the assets back and you are no better off and no worse off than you would have been otherwise.