4 Estate Planning Techniques to Consider During the Covid-19 Pandemic

The pandemic has created substantial challenges for many people and disrupted countless facets of daily living. Low-interest rates and depressed asset values, however, have created an ideal situation for estate planning. If you’re interested in planning for the future, there are some unique estate planning strategies that you should consider utilizing. This article reviews just a few of the most potentially helpful techniques that you should consider using during the Covid-19 pandemic. 


# 1 – Annual Gift Tax Exclusions


This amount refers to the amount that a person can give away each year without being subject to taxes. Currently, a person can pass $15,000 in assets tax-free to any person in any one year. This amount applies to how much can be given to one individual, which means that a person could make an unlimited number of gifts below this amount to various people without being subject to taxation.


 Due to the Covid-19 pandemic, various assets are currently at an all-time low. If you pass on these assets now while their value is comparatively low, you can pay the lowest taxes possible for such a transfer. Then, when the value of these assets’ appreciates and return to its previous value, your beneficiary can make the most of the asset.


# 2 – Charitable Lead Annuity Trusts


These trusts provide annual or routine distributions to a designated charity over a specific period. At the end of this distribution, the remaining assets are distributed to designated beneficiaries like children. These trusts can be structured with little or no gift tax implications and often benefit not just the charity receiving the organization but also the named beneficiary.


# 3 – Gifting Interest 


The pandemic has made gifting interest in a business, limited liability company, or partner an attractive option. Given that businesses or other assets might have been impacted by various changes brought on by the Covid-19 pandemic, gifting interest and other assets while values are lower can help to maximize assets that are passed.


# 4 – Grantor Retained Annuity Trusts


These trusts often hold assets that are anticipated to appreciate over time. The person who transfers the asset receives an annuity over a certain period. These trusts are often structured so there is no gift tax consequence and that anything remaining in the trust above the 7520 rate passes to the beneficiary. 


# 5 – Intrafamily Loans


Loans can be made to children or other family members at a low-interest rate. If assets purchased with funds from the loan later appreciate greater than the interest rate, the excess amount beyond the interest rate often passes tax-free. Used in combination with the gift tax exemptions, these assets can be utilized to forgive a loan over time. If you have an existing family loan, current all-time low rates mean that if you have an existing intrafamily loan, now might be time to refinance the amount at a lower rate.


Speak with an Experienced Estate Planning Attorney

Deciding what estate planning strategies work best for you is not easily done. If you need assistance navigating this process, you should not hesitate to speak with a knowledgeable estate planning lawyer. Contact Ettinger Law Firm today to schedule a free case evaluation.

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