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Current Estate Planning Opportunities in The Market/Stock Sell-Off


People are understandably concerned right now about the state of the market and portfolio losses, and what they need to do, right away, in order to ensure that they have basic estate planning steps in place. We have already discussed how important it is to ensure that, at a minimum, you have a will, Power of Attorney, Advance Directive, and a Healthcare Proxy. We also discussed the importance of having a contingent beneficiary, which is like a plan C, for estate planning in general right now, given how unpredictable the virus is. It is a good idea to have a backup plan for who will inherit your assets, as well as who will serve as your agent when it comes to power of attorney, for example, in case anything happens.

However, many may not realize that there may also be opportunities to enhance your estate planning during this time, which we discuss in greater detail below.

Converting Traditional IRAs to Roth IRAs

Converting a traditional IRA to a Roth IRA at a significant discount, especially if you have a large IRA that you were planning on leaving to your children or grandchildren, might be of interest to a number of families. Given that stock prices are currently down, the cost of doing so is substantially less than it would usually be, and the Roth IRA carries a number of benefits, such as being completely tax-free.

Gifting Shares

You are now able to gift more property tax-free than you previously could because it has been hurt in the market, and you can do so either directly to your loved ones or through trusts. Individuals can gift up to $15,000 and couples $30,000 worth of property, free of estate and gift taxes, to an unlimited number of people due to the annual gift tax exclusion, and it can be beneficial to gift now, especially as the markets start to turn around. By giving today, you are able to give more shares than you could previously – or in the future – because those shares cost less right now, but will be worth more in the future. However, make sure that any property that you gift is one in which you still have a gain versus a paper loss.

No-Interest Loans for Loved Ones

Also note that the current low interest rates allows you to provide no-interest loans to loved ones without any real tax costs. If that individual then purchases investments at low prices and sells those investments when the markets turn around, they have then made a profit off of your estate gift, free of taxes.

Installment Sale

Another option is to sell some assets to your children in an installment sale such that when exemption levels are cut in the future, some of those assets have been removed from the estate such that the estate may no longer be considered large enough to be subject to the estate tax.

Tax Harvesting

“Tax harvesting” is yet another option during this time, whereby you sell a security that is experiencing a loss, and by doing so, offset taxes on any gains and other income.

Contact Our Florida Estate Planning Attorneys for Your Planning Needs

Our attorneys are still here and working to ensure that you have what you need in place for your estate planning and probate needs here in Florida during this time. Contact our Orlando estate planning attorneys at Gierach and Gierach, P.A. today with any questions or concerns you might have.






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