All planning tools are not created equal. Some are more appropriate depending upon the interest rate environment and relative asset values. As you are probably aware from personal experience, savers and investors are wringing their hands over the current low interest rates and depressed asset values.
News flash: Low interest rates and depressed asset values create an ideal environment for using selected financial and estate planning strategies.
The two interest rates we'll focus on are the applicable federal rate and the IRC Section 7520 rate. The AFR is the minimum interest rate that must be charged on loans. The 7520 rate is used to value retained interests or split interest gifts.
The current (February 2010) annual long-term (greater than 9 years) AFR is 4.44% and has been holding relatively steady for the past three months. The current Internal Revenue Code (IRC) Section 7520 rate is 3.4%, just 0.4% above last month's rate. Let's look at some of the techniques that work well in the current low interest rate and/or depressed asset value environment.
Outright gifts
The gifting of assets that are depressed in value results in lower gift taxation. In addition, the lifetime gift tax exemption of $1 million and the 2009 annual exclusion of $13,000 can shelter "larger" gifts when asset values are temporarily depressed.
Intra-family loans
Wealthy families often transfer assets between generations to allow the next generation to capitalize on business and investment opportunities. Low interest rate requirements minimize the amount that must flow to the lender, allowing the borrower to retain the capital for longer periods and/or borrow more money as opportunities arise.
Installment sales
An installment sale is used to ease the burden on the purchaser of acquiring a substantial asset, as the sale spreads the repayment obligation over a period of time, rather than requiring the buyer to make a large single payment. Depressed prices and low interest rates make this an attractive technique for intra-family transfers where outright gifting will not be used.
Self-cancelling installment notes
A self-cancelling installment note (SCIN) is an excellent way to structure intra-family transfers, as nothing is included in the estate of the seller (typically the senior generation) since the obligation is cancelled at death. Again, depressed values and low interest rates ease the burden on the purchaser and make the transfer more cost-effective.
Patrick A. Lang, JD, CFP, CLU, ChFC, CFS, is vice president, sales strategies and business development, for National Life Group, Montpelier, Vt. You can e-mail him at 
