Franca Tavella, left, and Kevin S. Koscil, right, of White and Williams.
Introduction
The federal funds rate was raised to 2.5 percent at the end of 2018, and it is expected to continue to rise in the coming months and years. The federal funds rate has a direct affect on many other interest rates which can ultimately impact one’s estate planning goals. Specifically, as interest rates rise, there will be corresponding increases in the Applicable Federal Rate as well as the rate prescribed by Section 7520 of the Internal Revenue Code (the Section 7520 rate), both of which are used to determine the tax implications of certain gifts and other transfers for federal transfer tax purposes.
