COVID-19 Update #5: 2020 Wealth Transfer Planning Opportunities

September 2, 2020

With the presidential and congressional elections nearing and interest rates at historic lows, it’s a critical time to discuss your wealth transfer goals. These conversations are important to start now to have adequate time to develop your plan with your advisers. This includes potentially drafting trust documents and partnership agreements, and having appraisals done. Having a plan in place allows for quick implementation if new laws are passed and/or market conditions abruptly change. Many experts believe that if Biden wins, then the gift/estate tax exemption will be lowered by millions of dollars as early as January 2021. This would drastically change your estate tax and wealth-transfer ability. Based on your goals, we can tailor wealth transfer options for us to discuss. Here are some considerations:

  • Utilizing your remaining Lifetime Gift Tax Exclusion – currently, each taxpayer has an $11,580,000 lifetime exclusion amount.  However, that could be lowered to roughly $6,000,000 per taxpayer (or lower) starting in 2021, depending on legislative changes
  • Making a gift, but still having access to those assets (if you are married) – some trusts can be created with your spouse named as a beneficiary
  • Using at least one spouse’s full Lifetime Gift Exclusion of $11.58M in case the exemption does get reduced
  • Taking advantage of low-interest rate wealth transfer strategies, including:
    • Grantor Retained Annuity Trusts (GRAT’s)
    • Sales to defective grantor trusts
    • Loans/refinancing loans to family members/trusts
    • Sales of remainder interests

We are here to help. Please contact your Topel Forman adviser if you are interested in discussing your wealth transfer goals further.

Topel Forman LLC