Making the Most of Property Planning Alternatives – New York Property Planning Lawyer Weblog – Nov 21, 2020
If it were, estate planning would not be a one-time process. Instead, it is important to periodically review the terms of your estate plan to ensure that it is able to achieve your goals. Review of estate planning documents is especially important nowadays low interest rates and high exceptions that are likely to change in the not too distant future.
Fortunately, it is possible to create estate planning strategies that will allow assets to be transferred in a way that makes the most of these conditions. If you are interested in getting the most out of your estate plan and positioning your loved ones in the best possible way after your death, then read on as this article covers some key strategies that are likely to have a significant impact on your estate.
# 1 – Exceptions are at an all-time high
Because of the Tax Reduction and Jobs Act 2017can send an individual up to $ 11.58 million during their lifetime or in the event of death without being subject to federal taxes. The assets are subject to a 40% tax on the amount above this exemption. Unless President-elect Biden or his government passes laws lowering the amount sooner, this exemption will be reduced to half that amount in 2026. As a result, for individuals with estates who would be subject to these exemptions, gifting now instead of waiting is a good idea.
# 2 – Interest rates are at all time lows
The Internal Revenue Service has established interest rates that apply to capital transfers. These applicable federal tax rates (AFRs) are changed monthly and used, for example, for intra-family loans and installment sales. While the AFR for a medium-term loan compounded annually was 3.04% in November 2018, the same rate is 0.38% in 2020. Since AFRs won’t stay at this ideal low rate for long, now is an excellent time to think about installment sales or intra-family loans if necessary.
With intra-family loans, it pays to deliberately consider flawed grantor trusts. These trusts are more complex than intra-family loans and allow for income tax-free growth of the assets placed in the trust. Other trusts such as grantor trusts and charitable lead trust annuities, when used during a period of low interest rates, can also be powerful estate planning tools.
# 3 – Thoroughness is more important than ever
There are some unique estate planning opportunities during the pandemic, but these times have also increased the need to ensure that certain types of estate planning documents are properly prepared. For example, during the Covid-19 pandemic, it is more important than ever that health care representations are properly written before emergencies. This is because social distancing and the way Covid-19 patients are treated in hospitals can make it difficult to contact loved ones directly when an emergency situation arises. A proxy for healthcare provides the important function of letting spouses or other family members view your health records and make medical decisions. It is also important to ensure that details about loved ones can access your digital assets and accounts are also properly recorded.
Contact an experienced estate planning attorney
While your estate planning goals are your own, a knowledgeable attorney can help you ensure that your estate plan complies with all applicable laws. An attorney can also resolve any uncertainties or questions you may have about the estate planning process. Contact Law firm Ettinger today for help.