Explore five facets of wealth planning – from estate planning to borrowing, including specific opportunities for family offices, business owners and executives – that can be beneficial to consider in a low interest rate environment.
Though low interest rates can certainly be a headwind for investors, there are several planning, banking and investing strategies that can help fortify your wealth plan in a low interest rate environment. These strategies offer opportunities to maintain portfolio growth while still achieving your financial goals.
The Time to Act is Now.
Consider the difference between funding a five-year, $5 million Grantor Retained Annuity Trust (GRAT) with a 5.6% expected rate of return in January 2021, when the 7520 rate was at .6%, versus July 2021, during which time the rate doubled to 1.2%.
At the end of the five-year term for a GRAT established in January 2021, the remainder available to beneficiaries would be more than $110K higher than the same five-year GRAT funded just six months earlier.
Learn how to make the most of the current low interest rate environment across all aspects of your wealth plan including:
- Techniques to transfer wealth to future generations while incurring little or no gift tax;
- Lower-cost borrowing opportunities to seize opportunities without disrupting long-term wealth planning and investment strategies;
- Insights on optimizing family office assets by reevaluating liquidity positions and ensuring capital is used as effectively as possible;
- Opportunities to understand cash flow, tax and personal implications of borrowing through the business versus borrowing secured by personal assets; and
- Strategies for executives to assess retirement plans, leverage capital and optimize wealth transfer goals.
The Northern Trust Institute is at the forefront of helping clients address the full spectrum of lending, wealth transfer and investing strategies to make the most of today’s low interest rate environment. Our approach to Goals Driven Wealth Management is backed by innovative technology that can help quantify goals, determine illiquidity ratios and portfolio withdrawal rates as well as project estate taxes. These modeling exercises can be especially helpful as you consider the strategies and opportunities outlined in this series.
Download the full report to learn more.
Are You Making the Most of Low Interest Rates?
Revisit several aspects of your wealth plan that are sensitive to interest rates.