COVID-19 Creates Opportunities for Low Tax Cost Wealth Transfers

Rolando Garcia, CPA, JD, Tax Shareholder

COVID-19 is creating quite a disruption in today’s environment, including on our national and local economies, as well as market and interest rates. However, there is one area where taxpayers could use this disruption as a tax benefit. While wealth transfer planning is probably not anywhere near the top of the “to-do” lists for business owners or high-net-worth individuals, now is the perfect opportunity to transfer wealth to the next generations at historically low tax cost.

Factors creating this wealth transfer opportunity include:

• Depressed asset values that reduce the gift tax cost of transferring them
• Bottoming of the interest rates variously associated with valuing a gift
• Continued availability of popular planning techniques, valuation discounts and other tools that can reduce the gift tax cost of wealth transfer

In addition, although today’s high estate, gift and generation-skipping transfer tax exemptions are not scheduled to sunset until 2026, the upcoming election could accelerate that sunset and eliminate some of the proven wealth transfer planning techniques.

If you have been delaying addressing your wealth transfer options, now may be the most opportune time to start the process. Doeren Mayhew’s tax professionals can describe and illustrate techniques, highlight how they can be tailored according to your own objectives and circumstances, and provide insight into the types of assets to transfer in the most tax-efficient way for you. To begin exploring your wealth transfer opportunities, contact us today.