Janelle Tokunaga, CPA, MST
While it may seem like there has been a shortage of good news lately, we wanted to bring your attention to a few bright spots that have come about during our current economic downturn. With the extra time you have at sheltering in place, it may be a good time to revisit your current estate and gift plan.
To recap: the 2020 Federal lifetime exemption is $11.58 million per person, including inflation, and the 2020 annual Federal gift exclusion is $15,000 per donee and donor. The current economic market is showing decreased values in the public securities arena and lower overall real estate values in light of the COVID-19 environment.
The current lifetime exemption gives you the opportunity to make larger gifts of assets. But when combined with lower current asset values you can gift now with less exemption utilization, it leaves more exemption available for future gifts. So, now, may be a good time to think about gifting those depressed value assets that are expected to increase considerably in the future. Then, when the markets eventually recovers and your gifted asset values increase, they will already be outside of your taxable estate.
If you aren’t ready to gift assets directly, setting up and transferring ownership of real estate and marketable securities into closely held entities (such as FLPs and LLCs) may be a good option as well.
We encourage you to use this unique time to reflect on your current estate plan. Considering whether gifting is something for you may benefit you and your loved ones now and in the future. WFY advisors are available to discuss the tax benefits of gifting during our economic downturn and look forward to hearing from you. If you’d like to contact us, click here.
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