How can you create opportunities for estate planning during the COVID-19 pandemic?
Values of assets, both for business operations and publicly and privately held securities, have lost value in the current economy. The uncertainty created by the current environment has lowered the value of assets and made them candidates for various gifting scenarios now more than ever. The lifetime exemption at $11.58 million per person in 2020 is scheduled to go back to the previous lower levels after 2025 (or a potential change in administration or legislation). In addition, the annual exclusion at $15,000 can be used more efficiently in an economic downturn–giving your beneficiaries the benefit of an economic rebound and removing appreciation out of your estate.
Most closely held businesses will experience some form of business interruption and downturn during this current crisis, lowering values temporarily. Oil and gas prices have fallen, and the stock market is its lowest in years. Hopefully, all of these conditions are temporary and while no one wanted to see any of this happen, there are planning opportunities available that could be utilized to reduce potential estate tax in the future.
Common strategies can be supercharged using valuation discounts and temporarily depressed values:
- Gifts of interests in a family investment company
- Sales to intentionally defective trusts and
- Grantor Retained Annuity Trusts (GRATs)
Estate Planning Practice
If you would like to discuss planning ideas or have further questions about this content, your HoganTaylor Partner or Manager can connect you with our Estate Planning team. If you are not a current client or prefer to reach out directly to the Estate Planning practice, please feel free to call one of our Estate Planning partners:
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
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