A Letter From The Tax & Estate Planning Departments Regarding COVID-19

If we can be of assistance to you in any way, please reach out to the attorney with whom you regularly engage (or anyone else in the firm) and we will promptly respond to you or find someone who can provide the legal support required.  As an example, one of our clients has recently inquired about her property tax obligation for the April 10^th second installment and we were able to respond to her with the current status and promised to keep her informed of any new developments.  We will respond promptly to you with any questions you may have of a similar or different nature.

Another reason we are reaching out to you today is to remind you that all of the recent changes in the tax law make this an appropriate time to review your estate planning documents to assure yourselves that they are up to date.  We wish all of you continued good health.  In all cases, but especially if your estate planning documents have not been recently updated, please review the following aspects of your estate planning documents to see if any changes should be made:

1. Your Executor, Trustee and Guardian selections.
2. The appointment of your Health Care Agent under your Advance Health Care Directive.
3. The appointment of your Agent/Attorney-in-Fact under your Durable Power of Attorney
4. Your beneficiaries and their respective interests and dates (or ages) of distribution.
5. Your charitable gifts and pledges.
6. Your potential estate tax situation and liquidity.
7. Your life insurance policies and beneficiaries thereunder.
8. Certain unique planning opportunities (discussed below).

The Covid-19 virus pandemic has caused a sudden economic downturn and has had a substantial adverse impact on the value of many personal and business assets.  We believe that the current decline in value is temporary and that the economy will recover when the crisis has passed.  In the interim, you may have a unique opportunity to take advantage of depressed values and historically low interest rates – all of which came upon us suddenly.  If you would like to discuss planning strategies which permit you to transfer assets through an accepted mode of gifting at discounted values, we are happy to discuss the various alternatives with you to determine what plan might be best suited to you and your family.  Among the options available are:

1. Gifting of fractional interests in business entities to trusts for family members (taking advantage of newly increased valuation discounts).
2. Sales to an intentionally defective grantor trust (IDGT) to benefit younger generation beneficiaries in a tax neutral environment.
3. Gifts to a grantor retained annuity trust (GRAT) to further reduce gift tax valuations on gifts to younger generation family members.
4. Loans to family members or trusts for their benefit at currently low interest rates.

The above are examples but not the sole options available to you.  We welcome your call or e-mail to begin a discussion of what might be appropriate for you.

We wish all of you the best of health and safety.