The COVID-19 pandemic is a time of substantial stress for most people in the country. While we struggle to find out what life will look like after the coronavirus, many people are discovering that taking control of their estate plan can help them feel in control of something.
To better prepare you for creating an estate plan during this pandemic, the following reviews some critical steps that you can follow to make the most out of a volatile economy.
High Tax Exemptions
Exemptions for estate, gift, and generation-skipping transfer taxes are currently at an all-time high. These regulations are scheduled to decrease in 2025. Currently, these exemptions are $11.58 million for individuals. By transferring assets while these exemptions are still low, individuals can perform estate planning transfers in a manner that is most likely to avoid taxes.
Low Asset Values
Not only are tax exemptions currently at an all-time low, but asset values are also low. The combination of these two factors makes it an excellent time to perform transfers to beneficiaries.
Interest rates are currently the lowest they have ever been. The required minimum federal interest rate for transfers between related parties for April 2020 is extremely low. These low-interest rates make certain types of estate planning ideal. For example, lower interest rates are beneficial for grantor retained annuity trusts, and charitable annuity trusts.
Now is the Time for Grantor Retained Annuity Trust Transfers
The current economy is an excellent time to make transfers using grantor retained annuity trusts. These tools provide for the transfer of assets to beneficiaries, which might include family members or trusts.
Federal Income Tax Filings Have Been Extended
Following the COVID-19 outbreak, the Treasury Department and Internal Revenue Service on March 21, 2020, announced that the federal income tax filing due date has been extended from April 15 to July 15, 2020.
Taxpayers are also able to defer federal income tax payments to July 15 without facing additional interest or penalties. This means that if a person does not meet these filing dates, interest and penalties will begin to accrue on unpaid amounts beginning July 16, 2020. This deferment applies to taxpayers including estates, trusts, individuals, and corporations.
Taxpayers need not file any additional paperwork to qualify for automatic federal tax filing and payment relief. People who need time past the July 15 deadline can file Form 4868 to request filing extensions. The Internal Revenue Service requests that taxpayers who are due a refund file their taxes as soon as possible. In many cases, people in Ohio discover that their tax refunds are issued within 21 days.
Contact an Experienced Estate Planning Attorney
While there are developments on an almost daily basis, our lawyers are familiar with many of the challenges and concerns created by the combination of the coronavirus pandemic and estate planning. Contact Dworken & Bernstein today to schedule a free case evaluation.