With everyday life so unsettled and markets and interest rates so volatile, wealth transfer planning is probably not top of mind these days, even to high net worth individuals. However, the very conditions that are causing such uncertainty today have created the opportunity to transfer wealth to the next generations at historically low tax cost.
Among the factors creating this opportunity are depressed asset values that reduce the gift tax cost of transferring them, bottoming of the interest rates variously associated with valuing a gift or setting the bar for appreciation needed to make the transfer successful, the continuing availability of popular planning techniques, valuation discounts and other tools that can reduce the gift tax cost of wealth transfer. Finally, although today’s high estate, gift and generation-skipping transfer (“GST”) tax exemptions are not scheduled to sunset until 2026, the upcoming election could accelerate that sunset and, with it, the elimination of some of those popular wealth transfer planning techniques.
Here are some of the planning techniques that benefit today from one or more of the factors we noted earlier. RSM tax professionals can describe and illustrate these techniques, showing you how they can be tailored according to your own objectives and circumstances and what types of assets tend to work best in the respective techniques. Of course, no individual, even a very wealthy individual, should consider giving away significant amounts of principal or income unless he or she is both philosophically and empirically confident that they won’t miss the money. Discretion is the better part of valor.