If planning for the future has not been your priority in the past, the Coronavirus crisis may just be the motivation that you are looking for.
Any elder law lawyer will surely agree on the premise that due to the risky uncertainties that accompanied the COVID-19 virus, planning for the future becomes more of a necessity rather than a leisure exercise.
The pandemic has made people reconsider their estate plans and mull over their future security and safety, with business owners also getting into the same mindset and getting their affairs in order before the crisis takes its toll on their businesses.
An estate planning attorney would be a valuable asset in helping out people navigating through this current situation. The economic conditions led to several developments such as low-interest rates and lower valuations that can aid in re-assessing your future security, financial, and estate plans.
Here are five basic factors to consider;
Estate or probate planning goals
Planning your estate and probate goals could include determining the beneficiaries of assets, non-tax wishes, and goals that could include the values that are passed on to heirs, donations to charity, federal and state estate tax planning, and succession planning.
Personal financial planning
Assessing your personal cash flow and reviewing your personal financial plan is vital to your estate planning. This is critical because gifting strategies must be consistent with your lifestyle, sustainability, and retirement needs.
For instance, it makes no sense to gift your assets that generate cash flow if that income source is used for personal needs.
Family harmony, wealth, and asset preservation
The main goal of gifting assets is to reduce the burden of an eventual estate tax burden. However, asset ownership must be organized in such a way that it does not lead to a marked reduction in the values of the stated assets.
For instance, business owners have been gifting interests in the family business to children and over time, these values appreciated and grew outside of the owner’s estate.
However, when the process is done incorrectly, it can end up in family disputes and sow discord.
Valuation factors that affect reduced estate and gift exemptions
The pandemic-induced economic slowdown has caused a lower valuation of business assets thus, have an impact on the reduction of gift exemptions and estates.
Bear in mind that when exemptions are reduced, those who have not utilized these higher exemptions at this time could eventually lose them.
Interest rates also dropped to an all-time low which makes it suitable for estate planning strategies. These strategies may involve transferring assets to a trust in exchange for an annuity or a note, which can be returned based on the current interest rate. However, this strategy may be less beneficial when interest rates go up.
So, when you start planning for your and your family’s future, you could get valuable advice and guidance from an estate planning attorney.