Bear Market Provides Boost to a Little-Known Strategy; a Record Low Hurdle Rate

By Mike Spector

In July 2004, Ms. Ridgley transferred her money to the trust for a term of eight years. The IRS's hurdle rate at the time was 5%, but Ms. Ridgley took advantage of a rule that allowed her to use the rate from two months earlier, a relatively low 3.8%.

Today, the combination of low interest rates and depressed asset values makes it a "perfect storm of opportunity" for the affluent to execute charitable lead trusts and other vehicles that remove wealth from their estates and pass it tax-free to heirs, says Herb Daroff, an estate-planning lawyer at Baystate Financial Planning, a Boston wealth-advisory firm.