COVID-19: Estate and Wealth Transfer Planning Steps to Consider

During this time of uncertainty, we hope you and your loved ones are staying safe health-wise. In the current environment, there are also some financial planning steps you may want to consider.

Estate Planning Documents

For anyone who does not currently have any estate planning documents, we highly recommend that you contact an estate planning attorney to put the following in place:

1. Will – to designate an executor and nominate a guardian for minor children
2. Living Trust – to avoid probate and keep the administration of your estate private
3. Advance Health Care Directive – to nominate a trusted individual to handle your health care wishes if you become incapacitated
4. Durable Power of Attorney – to designate a person to handle your financial affairs if you become incapacitated

Be sure to also review the beneficiary designations for any retirement accounts, transfer on death (TOD) accounts and insurance policies.

This will help you make sure you are protected in case of any unforeseen circumstances.

Wealth Transfer

If you already have your estate planning documents in place, please consider making your annual exclusion transfers. Each individual donor is allowed to make a present interest gift of up to $15,000 per individual recipient ($30,000 for a married couple if the gift is from both spouses) without triggering a gift tax filing requirement.

Additionally, payments made directly to qualifying educational institutions for tuition of an individual are exempt from gift tax. Similarly, payments made directly to health care providers for providing medical service or medical insurance for an individual are also exempt from gift tax.

If you are considering making a Roth conversion, this may be a good time as the values have come down significantly.

For those who have taxable estates, this is a good time to utilize some of your lifetime exemption to transfer some assets to your descendants. Some options that are attractive in this low interest rate environment include: transfers to irrevocable trusts, sales to intentionally defective grantor trusts, grantor retained annuity trusts, charitable remainder trusts, and inter-family loans.

This is also a good time to refinance an existing inter-family loan to a lower interest rate.

If you have questions or would like assistance, reach out to ourCOVID-19 Rapid Response Team.