Flexible Payment Planning

Why Now is the Time to Rethink Your Estate Plan

By Bailey Tocco, CPA, Managing Director at CBIZ, Inc.

From Print Issue - Summer 2020
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Now might not seem like an ideal time to consider long-term plans, but for several reasons, it might be a good time to re-evaluate your estate plan. The disruption caused by the COVID-19 pandemic coupled with a favorable tax environment makes transferring assets more cost-effective, and this unique scenario might not be around for very long. Here are three reasons why you might want to rework your estate plan sooner versus later.


1. Valuation Changes

The market swings and economic shifts during the COVID-19 pandemic have temporarily lowered the value of many business and real estate assets. While the long-term economic effects remain to be seen, it is clear that financial markets and business values are depressed. This makes estate planning especially timely for individuals with real estate holdings and those who own closely held businesses. The level of business uncertainty may mean that transferring business interests in the current environment may allow for larger discounts for lack of marketability and minority interests.


2. The 2020 Election

Tax reform nearly doubled the thresholds for estate tax and gift exemptions when it went into effect in 2018. While the expansion of the lifetime estate tax exemption and annual gift tax exclusions aren’t set to expire until 2025, some speculate that a shake-up in Washington this November could lead to changes sooner than 2025. If you’re planning to take advantage of current exemption thresholds by gifting directly to your beneficiaries, now is the time to start thinking seriously about making gifts. The depressed value of assets may help you transfer more assets now significantly reducing or potentially eliminating estate or generation-skipping transfer (GST) tax. Trusts and other forms of gift structuring may also be used to minimize GST liabilities.


3. Charitable Giving Changes

The Coronavirus Aid, Relief, and Economic Security (CARES) Act makes charitable giving even more favorable for estate planning. For 2020, it changes the deductibility of charitable contributions for individuals who don’t itemize their federal tax returns. Individuals can take a new $300 above-the-line deduction for cash contributions to a qualifying charity. For individuals who itemize, cash contributions to qualifying charities are deductible up to 100% of the taxpayer’s adjusted gross income (AGI), up from 60% of AGI.


Stay Flexible

Additional information and economic relief measures related to the COVID-19 pandemic continue to emerge as new legislation is passed and more is understood about the long-term economic impact of the pandemic. If you are planning to make adjustments to your estate, keep in contact with your advisors so that you can incorporate emerging developments or relief measures into your strategy and reap what benefits may be available during this unprecedented time.