While the uncertainty in today’s market because of Covid-19 may have you nervous about your investments and the value of your assets, there are ways to take advantage of the opportunities that this drop in the market may create for you and your family.
We recently came across an article by Bob Carlson on Forbes.com about tax and estate planning opportunities that have come up in this time of uncertainty and volatility in the market. He discusses certain actions you can take now while the market is low that may be advantageous to you. We encourage you to read Mr. Carlson’s article (here).
We at Family Estate Planning Law Group want to draw attention to some of these opportunities discussed by Mr. Carlson and highlight how this downtrend in the market may help you better take care of yourself and your family.
Mr. Carlson lays out the following opportunities you may want to grab now if they align with your estate planning goals.
First, Mr. Carlson suggests that now is the time to make gifts to your family members if that was part of your plan or to consider making gifts of property that has a lower value in the market today. We know that the market will eventually rise again after this current situation is long behind us. It is likely that the value of the property gifted now will also rise. This means that you can gift more property away at a lower value. How does that work?
For example, if you made a gift of 1,000 shares of stock to a family member earlier this year and the value was $15 per share, the value of the gift would be $15,000. If you were to make that same gift today and due to the drop in the market, the stock was worth $10 per share, you could give a gift of 1,500 shares of stock to reach the same value. You would be giving more of your property away, but the value of the gift would be the same. This means when the property eventually regains its value, you will have used less of your estate/gift tax exemption but gifted the same amount of property, effectively reducing your potential estate tax burden. If you are concerned about owing estate taxes, we here at Family Estate Planning Law Group can discuss potential gifting strategies and whether they might be a useful tool for you as part of your overall estate plan.
Second, Mr. Carlson suggests that now is the time to take advantage of low-interest rates on loans to make a loan to a family member, refinance an existing loan or debt you may have, or take out an additional loan that you may have been thinking about.
You may want to consider loaning funds to a family member to buy an investment property they have been looking for or maybe purchase their first home through a low interest or even no-interest loan. If your family members sold the property in the future, they would repay the loan but get to keep the gain on the appreciated property.
Refinancing your existing debt at a lower interest rate may help you save on your monthly payments as well as lower the amount of interest owed. Additionally, now is the time to take out any new loans you may need, including a home equity loan to make the home improvements you’ve been dreaming about or wishing you had completed before the quarantine.
The moral of the story here is that whatever your situation if you look at the glass as half full, there may be opportunities available in this lower market that you can take advantage of to benefit yourself and your family. We at Family Estate Planning Law Group can review these options with you and discuss how they would work and fit into your estate plan. Our goal is to help you take care of your family in a way that works for you.
To learn more about the opportunities during this uncertain time and how we can help you take care of your family, visit our website, explore our blog, and schedule your complimentary consultation today!