Wealth Transfer Opportunities During Covid-19 Crisis

Although we are in the midst of an unprecedented historical event because of the COVID-19 pandemic, current circumstances offer a window of opportunity for wealth transfer planning for the right individuals. The combination of low interest rates and lower and more volatile asset values contribute to a favorable environment for the transfer of wealth for those in a position to take advantage of it.

These opportunities range from relatively simple strategies, such as gifting assets at lower values for federal gift tax purposes or making low interest rate loans, to more complex planning, such as utilizing a Grantor Retained Annuity Trust (commonly referred to as a “GRAT”). A GRAT established in May this year can result in a tax free wealth transfer to family members of appreciation of the value of the assets transferred to the GRAT in excess of 0.8%/year, over whatever period of time is set for the term of the GRAT at the outset. For clients who believe they now have assets likely to appreciate in value more than 0.8% per year over the term of a GRAT (which typically is structured to last 2-5 years), transferring that excess appreciation to family members free of any gift or estate tax (and without using any of their exemptions or annual exclusions from such taxes) is an attractive estate planning option to consider.

We would be happy to discuss wealth transfer planning options and explore with you if taking any action during these challenging times may be appropriate for you and your family. Although our physical office remains closed because of the shelter-in-place order, we continue working from home to provide excellent service to our clients.