Alert November 01, 2008

Estate Planning Opportunities in a Bear Market

While your investment portfolio may be suffering due to the financial crisis, there is a silver lining to the cloud:  lower asset values present excellent estate planning opportunities.  In addition to decreased stock and real estate values, interest rates are low and, given the current economic and political climate, it is unlikely that the estate tax will in fact be repealed or significantly reduced beyond the currently scheduled increase in the federal exemption amount.  This combination of factors makes it one of the best times in recent memory to make estate planning transfers. 

Options to consider include making annual exclusion gifts of depreciated assets, taking advantage of the $1 million lifetime gift tax exemption amount, and even in certain circumstances, making taxable lifetime gifts.  Techniques such as grantor retained annuity trusts (GRATs), sales to grantor trusts, making or refinancing intra-family loans, and charitable lead annuity trusts (CLATs) are particularly attractive in this low interest rate environment.  Qualified personal residence trusts (QPRTs) can be a good way to transfer interests in primary or vacation residences which have dropped in value. 

We would be happy to discuss with you how you might take advantage of the opportunities presented by the current market situation in the context of your individual estate plan.