Estate Planning Opportunities in the COVID-19 Era: Strategies to Consider Now

estate planning opportunities covid-19

3 min read

While the economic disruption caused by the COVID-19 pandemic has created uncertainty in many aspects of our daily lives, it has also, on the other hand, created an opportune time for planning.

Financial markets are down, assets have dropped, and interest rates are low. Combined with the current high estate tax exemption, all of this creates the perfect opportunity to review and revise your estate plan.

There are many planning strategies that business owners and high-net-worth individuals can take advantage of during this time. Here are a few to consider.

Timing Is Everything: Consider These 3 Planning Strategies Now before It’s Too Late

1. Maximize gifts to your family with current favorable tax policy.

Now is the perfect time to maximize gifts to your family, as the current U.S. tax law allows for a historically high gift and estate tax exemption at $11.58 million for individuals and $23.16 million for couples.

However, with the upcoming election, this could quickly change. The gift and estate tax exemption could fall, or tax rates could increase — or even both. Our advice is to take advantage of a good thing while it’s here. Don’t wait until it’s too late

Read More: A Big Opportunity for Estate Planning in 2020

2. Take advantage of low valuations to minimize gift and estate taxes.

COVID-19 has presented a unique planning opportunity for business owners considering an ownership transfer, as business valuations are currently lower, ultimately leading to a lower tax bill or the ability to transfer a more significant portion of their business assets.

Most organizations will have a lower valuation on June 30, 2020, than on January 1, 2020, given the uncertain economic landscape we are currently facing. Businesses were closed for some time, revenues were lower, and debts were increased. This makes “now” a prime time to get a business valuation performed. Use the decrease in the value of your business to your advantage.

3. Sell assets now that you intended to sell soon anyway that have appreciated over a long period.

Tax increases soon are likely, especially for affluent families. Joe Biden has been evident in his plan to hike taxes on the wealthy, should he win the upcoming presidential election. By selling assets now that have appreciated over a long time that they intended to sell soon anyway, high earners will pay a top tax rate of 20% rather than risk the 39.6% rate proposed by Biden.

If You Wait until It’s Too Late, It’s Too Late

The perfect time to reevaluate your estate plan is NOW. Don’t wait until it’s too late, and tax rates increase, or the gift and estate tax exemption falls, or your business value recovers and is higher than the current pandemic value.

If we can help you plan, please reach out to us today. We have the experts and experience necessary to help you find the right options and secure your future.

As always, we are here to make the complex simple.

Let’s talk!

July 28, 2020