estate planning
“The crisis has the potential to upend many Americans’ retirement plans,” Alessandra Malito writes in MarketWatch. Malito refers to the replacement ratio, which is how much of a person’s pre-retirement income they’d need to maintain their standard of living in retirement. Pandemic-related market volatility and unemployment rates will almost certainly have a negative impact on those replacement ratios, Malito believes, especially in cases where people are forced to retire earlier than planned because of loss of a job and difficulty finding a new one.

“Little wonder that fear of COVID-19 has scores of people making critical estate planning decisions,” Kerry Hannon observes in AARP. And so they should, since 52% of people age 55 and over don’t have a will in place!

At Geyer Law, we heartily agree with Texas personal finance blogger Sasha Hutchison, who advises “Hold off on panicking by looking ahead…Take a look at your net worth, what you owe, and what you can do to bring in cash now.” When Hutchison advises looking at “everything”, she includes health savings accounts and cash-back credit cards. Taking a close look at all aspects of your finances “helps you to feel more in control,” she states.

In the best of times, retirement isn’t easy, and the coronavirus has only unsettled people even further, Jill Cornfield writes for CNBC, citing recent research from the Transamerica Center for Retirement Studies showing that 23% of currently employed people say their retirement hopes have dimmed.

From an estate planning point of view, the positive effect of all the COVID-19-generated concern is that planning itself increases the odds of achieving desired outcomes. As Law.com so aptly puts it, “The COVID-19 pandemic has created many estate planning issues, the first and foremost of which is, do you have an estate plan?

One very basic consideration Eugene Pollingue, Jr. brings to the fore in the Law.com article is this: Is your estate likely to be subject to estate tax?

  1. If the answer is yes (assuming the client believes the current decline in the value of his assets is temporary) one technique would be to give away assets that have declined in value. Another would involve giving away only the future appreciation in assets rather than the assets themselves.
  2. If the answer is no, an individual would be better off holding appreciated assets until death so that heirs can avoid capital gains tax.

At Rebecca W. Geyer & Associates, our emphasis is on alleviating panic. Rather than allowing the pandemic to “infect” your planning, we focus on helping you look ahead byexploring which steps to take next.

– by Ronnie of the Rebecca W. Geyer Blog Team