Estate and Income Tax Planning Opportunities During COVID-19

While the coronavirus pandemic’s effects have rippled across the economy leaving volatile markets, dramatic impacts to portfolios, and overall great uncertainty, certain opportunities now exist for affluent taxpayers. This is a time to assess changes in law due to the pandemic and possibly pivoting to planning strategies that weren’t otherwise available.

Looking for opportunities amid such an economic crisis could be key to significantly increasing family wealth by minimizing or avoiding estate taxes.

Here we take a brief look at planning opportunities for the ultra-high net worth individual.

  1. Take advantage of unprecedented high estate and gift tax exemptions.  Under present law, every individual can avoid estate and gift tax on assets owned in the amount of $11,580,000 per person, or $23,160,000 per married couple.  This exemption is scheduled to expire on December 31, 2025, and is expected to drop to under $6,000,000 on January 1, 2026.  If there is a change in U.S. administration due to the outcome of the elections in November, the exemption could actually be reduced before the scheduled expiration period.
  2. Evaluate opportunities with historically low-interest rates.  For the month of June 2020, the applicable federal rate for short-term loans of up to three years is only .18%; for midterm loans and up to nine years is .43%; for long term loans 1.01%.  These are attractive rates for the individual motivated to engage in more sophisticated estate and gift tax planning utilizing transactions including Grantor Retained Annuity Trusts and Intentionally Defective Grantor Trust as tools to reduce taxable estates.  Families who have existing intra-family loans in place may wish to consider refinancing these notes as a result of the current low-rate environment.
  3. Evaluate gifting strategies when portfolio values are low.  With possible reduced investment portfolios and real estate values, individuals motivated to pass along family wealth to younger generations may find that they can do so while using less of their gift tax exemptions and exclusions.  These strategies may be further enhanced by the use of family entities such as Family Limited Partnerships or LLCs.
  4. Consider the power of converting traditional IRAs to Roth IRAs.  While traditional IRA values may be low, this may be an opportune time to consider converting these plans to a tax-favored Roth IRA.
  5. The Coronavirus Aid, Relief and Economic Security (CARES) Act suspends the required minimum distribution rules for 2020 which provides a significant advantage to the IRA holder by allowing additional tax-free deferral.
  6. Consider tax-loss harvesting by selling investments that are down in value and carefully replacing them with similar investments, then offset realized investment gains with these realized losses.

As mentioned above, these opportunities are not expected to last and may be gone sooner than expected under current law depending on election outcomes so the time to act is now.

 Windham Brannon advisors assist our clients with these and other estate and income tax strategies. 

Please contact your Windham Brannon advisor for a personalized discussion of these topics or email Courtnay Bazemore at

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