With many political changes on the horizon, we are monitoring how all of this will affect activities such as estate planning. This is especially important to watch given that a new president is taking office for the next four years and the government will likely be divided for at least the next two years.
Let’s talk about things that should be monitored moving forward. Some elements are obvious as far as things to continue to take advantage of in the estate planning space. The historically low interest rates for example… we want to see our valued clients continue to use these for wealth transfers that are tax free.
It would also be a smart move to utilize what are known as squeeze and freeze tools when it comes to estate planning. These are still available for now and allow you to move assets out of your estate while still maintaining full access flexibility and control. Using these tools allows you to shift assets into trusts.
Speaking of transfers, now may be the time to fund assess into entities and then move the interests into other entities at a lower valuation. This has been an ever-changing element for years now, with President Obama eliminating these discounts for most intrafamily transfers. Then we saw the Trump Administration allow them. With Joe Biden taking office, we don’ t know what will happen with the discounts next. Therefore, lock those in now for grandfathering purposes.
The $11.8 million doubled exemption needs to stay on your radar. In five years, and that is the best-case scenario time wise, the exemption will be slashed in half. Continue to use this exemption in your planning as long as you can.
These are just some of the considerations you need to be considering now with estate planning. Do not try and go this alone. A CPA is a vital part of the planning process given how much taxes come into play. Contact us today so we can be of help to you.