Estate Planning and Valuation During an Uncertain Economy – and an Election Year

Schneider Downs has published a number of articles in recent months discussing valuation and estate planning strategies during this difficult economic time (links are included at the bottom), but now these strategies are even more relevant as the upcoming election could significantly impact future estate tax laws.

If there is any bright side to an economic downturn, it may be that ‘less is more’ when it comes to planning your estate. Generally, the less assets remaining in your estate upon death, the lower its tax burden. To minimize the size of an estate, an individual can make gifts during their lifetime by taking advantage of the lifetime gift tax exemption, currently $11.58 million per person, and the annual gift tax exclusion of $15,000 per donee.

During an economic downturn, investment values, including ownership interests in private and public companies, often become depressed. One receives the added benefit of gifting such assets while they have declined in value since a larger piece of their would-be estate may be gifted while still remaining below the lifetime exemption and annual exclusion limits. The donor will have reduced their estate tax burden, while the donee receives assets that will potentially increase in value when the economy recovers – a win-win situation.

It is unclear how lifetime exemption and annual exclusion amounts will change, if at all, after the November election. The Tax Cuts and Jobs Act passed by President Trump in 2017 doubled the gift tax lifetime exemption to its current level and sunsets on December 31, 2025. Many predict the estate tax exemption would be reduced if former Vice President Joe Biden were to take office, but the magnitude of that reduction is not certain.  Therefore, it would be beneficial to take advantage of the exemption at its current level before it is potentially reduced.

To be sure, the future of the current estate tax environment is uncertain, and the values of many investments have decreased as a result of volatile market conditions, so this may be an ideal time to discuss your estate planning strategy with your financial/tax advisor.

Schneider Downs has significant experience providing estate planning consulting.  We have also prepared numerous valuations for gift and estate tax purposes.  Contact Greg Allison (412-697-5341; gallison@sdcpa.com) or Melanie LaSota (412-697-5242; mlasota@sdcpa.com) for more information about our estate planning services and Steve Thimons (412-697-5281; sthimons@schneiderdowns.com if you have questions regarding valuation services.

 

Sources:

https://www.schneiderdowns.com/our-thoughts-on/use-it-or-lose-it

https://www.schneiderdowns.com/our-thoughts-on/current-market-conditions-valuations-estate-planning

https://www.schneiderdowns.com/our-thoughts-on/estate-planning-tool-business-succession-plan

https://www.schneiderdowns.com/our-thoughts-on/decipher-estate-trust-deduction-changes

https://www.schneiderdowns.com/our-thoughts-on/estate-planning-opportunities-covid19

https://www.schneiderdowns.com/our-thoughts-on/estate-planning-volatile-market   

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

Projected Estate and Gift Tax Changes Announced by the IRS for 2021
IRS Issues Final Regulations for Non-Grantor Trust Deductions
Estate Planning and Valuation During an Uncertain Economy – and an Election Year
District Court Dismissal in Lee v. Argent Trust Company Upheld in Appeals Court
Estate Planning as a Tool for Your Business Succession Plan
Estate of Jones v. Commissioner

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