Listen to Lawrence…Corporate and High End Estate Planning

April 13, 2020

Dear clients and friends,

My partner, Larry Siegel, handles our corporate and high end estate planning practice. I asked him yesterday, “Taking into consideration the current exemptions for each, what advice would you give our more affluent clients who have taxable estates of over $5,850,000 in New York and over $11,580,000 federally?”

His response was that the current crash of the stock market and most likely, decreased real estate values, presents a terrific opportunity to save a tremendous amount in estate taxes. A guiding principal of estate tax planning is to die with less money. Less money, less tax! One way to do that is to reduce your estate by making gifts of your assets while you are living, removing all the future growth on those assets from your estate. The best asset to give away is one that is likely to grow significantly during your life. Giving assets away today while the stock market and real estate values are temporarily depressed because of the Covid-19 pandemic is a unique opportunity because most people predict that values will rebound over the months and years ahead as the world recovers from this crisis. This strategy takes on more significance since the Federal estate tax exemption is already scheduled to decline from its current $11.58 million to approximately $6 million in 2026 – or sooner, depending upon the results of the 2020 election and the government’s need to pay for the pandemic bailout.

Larry also pointed out that an income tax opportunity exists with your retirement plans. He said that now may be an ideal time to convert your IRAs, 401ks and other retirement plans to Roth IRAs or Roth 401ks since the values are temporarily low. Lower value means lower income tax upon conversion. The later growth will then all be tax free. We hope this message helps and will lead to big savings for your family.

Please pass this information on to your family and friends and continue to keep your questions coming!