Quick Advice about COVID-19 and Wealth Transfer Planning

The COVID-19 pandemic has understandably left many people facing challenges. Remember that even the most difficult times often present opportunities, which currently includes an ideal situation to transfer assets to a loved one. The combination of decreased market values, lowered interest rates, and a high tax rate exemption has caused people to utilize several advantageous estate planning strategies.


# 1 – Making the Most of Gifting


Based on the value of assets, transferring property through gifting often requires individuals to consider estate taxes, gift taxes, and generation-skipping taxes. By transferring assets to loved ones while the asset’s value is temporarily at its lowest, you have the greatest chance possible of removing the assets from your taxable estate while making the most out of available exemptions. 


# 2 – Consider Grantor Retained Annuity Trusts and Private Annuities


These asset transfer strategies depend on interest rates to calculate payments for assets transferred. With the country’s all-time low-interest rates due to the coronavirus, this situation permits lower payments to be made for the duration of the agreement. 


When transferred assets increase in value later, the corresponding appreciation is often capable of estate taxes, gift taxes, and generation-skipping taxes. These tactics can often be used to make sure the maximum amount of assets possible are transferred to beneficiaries.


# 3 – Utilizing Estate Tax Returns


If an estate tax is due because a loved one recently passed away, the Internal Revenue Service permits the person filing for estate taxes to value the deceased individual’s assets at the time of their death or any point within six months of the person’s death. 


If you are appointed as an executor and the deceased passes away during the current low market conditions, you might consider utilizing an alternate valuation date provided that it results in lower valuations and reduced tax obligations. By keeping a close eye on how assets are impacted by the current economy, you can utilize creative asset transfers that avoid taxes to the greatest degree possible.


# 4 – Fully Evaluate Your Situation


The current economy is an excellent time to review the terms of each of your estate planning documents. This should include wills, trusts, health care directives, powers of attorney, and beneficiary designations. If any of the various economic and lifestyle changes that have occurred over the last few weeks have caused your wishes to change, you should make sure that these intentions are accurately reflected in your estate plan. 


While it can be challenging with recent executive orders passed by Governor Cuomo and Governor Murphy about social distancing to satisfy estate planning formalities like witnesses and notaries, a knowledgeable estate planning attorney understands these challenges and can help you properly update the terms of your estate plan in a manner that conforms with the Centers for Disease Control’s guidelines about how to avoid the coronavirus. 


Speak with a Seasoned Estate Planning Attorney

If you need the assistance of an estate planning lawyer, do not hesitate to contact Ettinger Estate Planning today to schedule a free case evaluation.

Contact Information