Previous | Four tips to getting approved for a credit card Next | Investor Alert: Cheesecake Factory settles with SEC
January 21, 2021 / The Merrill Anderson Company
The perfect storm for estate planning

The perfect storm for estate planning

According to estate planner Maurice R. Kassimir, Esq., the present moment has provided a “perfect storm” for wealthy families to meet with their estate planners and implement some wealth transfer strategies. In a November webinar, Mr. Kassimir pointed to three factors that make these times unique:Family standing together outside of house

  • The prospect of higher taxes on “the rich.” The scheduled 2026 drop in the federal transfer tax exemption remains in place. Although few now predict that the drop will be accelerated, even fewer predict that the current exemption levels will be made permanent. Thus, there is every incentive to make large gifts soon to “lock in” the higher amounts, $11.7 million per person in 2021. What’s more, the yawning federal budget deficits are likely to be addressed with higher taxes, with most of the burden targeted to the wealthy.
  • Covid-19 has caused valuation discounts to soar. Economic pain and uncertainty reduces the value of many assets, notably small businesses and especially real estate, even though publicly traded stocks seem to be doing well. Mr. Kassimir observed that in New York City, the value of some commercial real estate is down as much as 75 percent as tenants are no longer able to pay their rents. With such large discounts in place, the $11.7 million lifetime exemption from gift tax will shelter far more in assets than would have been true one year ago. 
  • Historic low interest rates. The low interest rates provided by the IRS tables makes this an exceptionally good time for many estate planning strategies, such as grantor-retained-annuity trusts (GRATs). The November 2020 7520 mid-term rate was just 0.47 percent.


Implicit in these examples is an assumption that most asset values will return to normal after a vaccine brings the pandemic to an end. The other problem planners may face is that in times of severe economic uncertainty, even those with $20 million in assets may not feel rich enough to part with a substantial portion of them simply to save taxes for their heirs.


(December 2020)

© 2020 M.A. Co. All rights reserved.

 

Recent Articles
Investor alert: Robinhood app hit with hefty fine from federal regulators
Investor alert: Robinhood app hit with hefty fine from federal regulators

Investor alert: Robinhood app hit with hefty fine from federal regulators

February 23, 2021 / Shelby White

Gift values during a pandemic
Gift values during a pandemic

Gift values during a pandemic

February 16, 2021 / The Merrill Anderson Company

How to avoid the car wrap scam
How to avoid the car wrap scam

How to avoid the car wrap scam

February 10, 2021 / Ray Wills

Annual Big Game Predictor
Annual Big Game Predictor

Annual Big Game Predictor

February 05, 2021 / Warren Hurt

The three best ways to use a credit card
The three best ways to use a credit card

The three best ways to use a credit card

February 03, 2021 / Cynthia Marconi

Read this before investing in an IPO
Read this before investing in an IPO

Read this before investing in an IPO

January 26, 2021 / Warren Hurt

Investor Alert: Cheesecake Factory settles with SEC
Investor Alert: Cheesecake Factory settles with SEC

Investor Alert: Cheesecake Factory settles with SEC

January 23, 2021 / Shelby White

Four tips to getting approved for a credit card
Four tips to getting approved for a credit card

Four tips to getting approved for a credit card

December 16, 2020 / Cynthia Marconi

Five Reasons for a Trust
Five Reasons for a Trust

Five Reasons for a Trust

December 16, 2020 / The Merrill Anderson Company

Join our e-newsletter

Sign up for our e-newsletter to get new content each month.

NOTICE: YOU ARE LEAVING F&M TRUST!

You are now leaving the F&M Trust website. Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security or accessibility standards as ours. F&M Trust neither endorses nor guarantees offerings of the third-party providers, nor is F&M Trust responsible for the security, content or availability of third-party sites, their partners or advertisers.