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How to Take Advantage of New Estate Planning Opportunities Caused by the Coronavirus

A depressed market intersecting with the ongoing pandemic and current tax laws has given rise to potential tax benefits for those interested in reviewing their estate plans.

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The number of global coronavirus cases surpassed 900,000 on Wednesday—with more than 200,000 known infections, and a death toll that has quadrupled over the last week just in the United States. The health implications alone are terrifying enough, not to mention the economic turmoil or the emotional toll of lockdown measures currently affecting three out of four Americans.

We’re living in a difficult and challenging time, which can make grappling with our own mortality all the more frightening, but for some, right now is actually the perfect time to think about estate planning. On Wednesday, Worth kicked off its new online roundtable series, Financial Front Lines, with an informative discussion about why reviewing your trust and estate plan should be a priority as this crisis unfolds. Spotting problems is obviously important. But as host Juliet Scott-Croxford, Worth’s CEO, and special guests Emily Brunner, UBS senior wealth strategist, and Sharon Sager, UBS private wealth advisor, pointed out, there are also opportunities to consider.

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Both financial experts acknowledged the high levels of anxiety currently plaguing the globe but stressed that this is not like the 2008 financial crisis.

“I think this virus caught a lot of people off guard, but what we try to tell people is this is not a financial crisis,” Sager explained. “This is a health crisis with accompanying economic dislocation. The dislocation was purposely driven by things like social distancing and limiting mobility. So, we are actually hopeful…this is painful but not permanent.”

In fact, for some families, the current financial landscape could prove advantageous thanks to low interest rates and depressed asset values—that’s where estate planning strategies come into play.

“It is definitely not a bad time to do an estate plan,” Brunner said. “Do not let the current time be a reason not to act. In fact, it’s a reason to act.”

“The IRS just came out with one of the lowest rates applicable to certain wealth transfer techniques, so that, coupled with the depressed asset prices, really set up some great opportunities,” Sager added.

According to Brunner, the reason right now is such a good time for estate planning has to do with where we are in the federal estate tax system, generally speaking. While the federal estate tax rate is a flat 40 percent, everyone can currently leave $11.58 million to children or loved ones.

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“So, a married couple can pass $23 million-plus to loved ones before they start to pay that federal estate tax,” Brunner explained. “And that exemption is very generous by historic standards, and it’s scheduled to increase for inflation until the end of 2025, when by law it is scheduled to be halved. Of course, if Congress chooses to act before that—if Congress passes a law and the president signs it—they could decrease the exemptions even sooner than that. So, even setting aside the current opportunity, it may be the right time to make gifts in advance of the exemptions decreasing.”

Of course, it’s all about strategic planning and making decisions that are right for you and your family. Estate planning can be intimidating—even more so during these uncertain times—but opportunities do exist within the chaos if you know where to look. Thankfully, UBS has provided a number of resources to help us navigate through these choppy waters and protect our families and their futures.

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