2020 Trust and Estate Update

With the election coming up in November and year-end following – then couple that with a pandemic that has completely disrupted the economy and interest rates – we can be certain tax and estate planning changes are coming.

Here Mark Harder (Partner at Warner Norcross & Judd LLP) and Jamie Sanders (Tax Partner at RSM), give us their Top 10 things that are (or should be!) on your family’s mind before year end:

1. Top off existing gift trusts and create new gifts to use exemptions.
2. Reserve your professional advisors. Make sure your advisors know you need their time to put a plan in place.
3. Create SLATs to use your exemptions. Spousal Lifetime Access Trusts are useful for clients who don’t want to part completely with a large sum of money in order to use exemptions.
4. Consider using “reverse” income tax planning. Typically CPAs tells you to take as much deduction as possible. But if we feel there is going to be a change in tax rates, we may want to do some “reverse” tax planning.
5. Form GRATs (Grantor Retained Annuity Trust) while the 7520 rate is low (0.4% Sept/Oct 2020) and they are still permitted. This can be incredibly effective, but could change depending on the election.
6. Consider unique charitable planning opportunities. 2020 leaves us in a great planning position for philanthropy.
7. Refinance intra-family loans to take advantage of low rates. Or do new loans if you have family who can take advantage of it.
8. Clean up your house! The IRS realized the connection between donating to private foundations and making other big charitable gifts. The IRS is now auditing and targeting people who do both. Make sure your records are in order.
9. Be mindful when dealing with valuation risk. Asset values have been volatile this year. Be sure you have current appraisals as of the time you’re making the gift.
10. Use your swap powers to make sure appropriate assets are in the appropriate vehicles. Look at current trusts and swap into another investment.

Mark Harder is the Partner and Chair of the firm's Private Client and Family Office Group, has dedicated his practice to counseling and representing high net worth individuals, families, family businesses and their owners, and closely held businesses. He provides his clients with estate planning and estate settlement services, advises on family business succession planning matters, represents family and closely held businesses in their day to day business matters, and serves as an adviser and counselor on legal matters to businesses, individuals, and their families.