2020 is shaping up to be a pivotal year for estate planning due to:
- The 2020 election and potential political change
- The current high estate and gift tax exemption ($11.58 million)
- The COVID-19 pandemic
- Very low interest rates
- Tax changes that could come in 2021
Strategies we’ve identified that may be beneficial are:
- Convert IRA monies to Roth (income taxes going up?)
- Deposits into Roth accounts (income taxes going up?)
- Accelerate income / defer deductions (income taxes going up?)
- Accelerate gains / defer unrealized losses (capital gains tax going up?)
- Sale to defective grantor trust (estate/gift taxes going up? / exemptions going down?) (repeal of step up in basis rule?)
- Place assets into strategic estate planning trust that becomes irrevocable on 12/31/20 (estate/gift taxes going up?) – pull assets out prior to 12/31/20 if Trump wins
- Have cash available to use and/or deploy (in case stock market drops or 2nd wave of COVID hits)
- Gift to children/grandchildren for Supplemental Retirement Plan and/or Long Term Care protection strategies (estate/gift taxes going up?)
- Consider variable and/or index annuities (lock in current equity gains and purchase future income guarantees) (interest rates low for foreseeable future?)
- Spousal Lifetime Asset Trust (SLAT) (estate gift taxes going up? / exemptions going down?)
- Review estate planning documents (Confidence & “Sleep Well At Night”) – Review monetary results of your planning . . . who gets what when?
- Swap high basis assets (in your estate) for low basis assets (already in grantor trust) – (creates a step up in basis for assets at grantor’s death under current law)
CRN-3278818-100920