While at Geyer Law, our attorneys offer no direct investment of financial planning advice, instead working in cooperation with financial advisors to coordinate estate planning strategy and investment/ financial planning strategy, we did want to bring a select number of these important new estate planning-related opportunities and concerns related to the coronavirus pandemic.

“The rapidly evolving coronavirus crisis is creating a plethora of unique estate planning and legal challenges across the globe,” observes the National Law Review. COVID-19 also creates several unique opportunities in wealth planning, the authors add.

The unusually low interest rate environment

“Fed seems inclined to keep rates low as virus poses risks,” the Los Angeles Times reported, noting that the minutes of the Fed’s meeting showed that officials were ready to keep short-term rates at a range of 1.5% to 1.75% for the foreseeable future. At least three very important estate planning opportunities present themselves, both based on the unusually low interest rate climate.

1.       Senior family members can more easily lend or sell assets to younger relatives or to trusts for their benefit. Not only does any appreciation above the interest rate charged pass to the juniors (or to trusts) transfer tax-free, but the portion of the assets remaining in the senior’s estate will be frozen at that loan/purchase price.

2.      One form of intra-family lending is through mortgage lending. Financing a mortgage for younger family members allows them to avoid real estate closing costs and administration fees. With intra-family financing, adult children with poor credit history can buy a home. What’s more, the parents can decide to forgive part of the loan each year as part of the annual gift tax exclusion, which in turn reduces the interest expense the children pay.

3.      Grantor Retained Annuity Trusts and Charitable Lead Annuity Trusts (both of which allow a senior to contribute assets while retaining a right to a stream of income for life) have a current assumed rate of return of only 1.8%. If the assets outperform that very low rate, the excess escapes estate tax.

Estate planning ensures control over your assets and documents, preparing you for life’s twists and turns. At Rebecca W. Geyer & Associates, our goal is to help you prepare for those “twists and turns”. While the coronavirus has certainly presented us all with a host of very daunting obstacles, on the positive side, some opportunities have been presented. Is it time to re-customize your plan to secure your hard-earned assets and protect your loved ones’ well-being?

– by Rebecca W. Geyer