With the market taking a downturn, now may be a good time to look over your estate plan and think about reducing your estate taxes. You might be worried about your declining stocks, but the reality is that this is a perfect time to enhance your tax and estate plans.
For instance, right now, you can convert a traditional IRA to a Roth IRA at a discount thanks to the low market rates. You may also want to consider gifting property that has taken a hit thanks to the downturn. For example, if you give away $15,000 of property as a gift, you won’t need to pay taxes, and they could see that grow exponentially once the markets recover. Essentially, you’re giving a much larger gift, even though it’s minimized at the moment.
Did you know that you can give $15,000 worth of gifts to anyone? You can give a tax-free gift to your children, friends, relatives or others without worrying about it influencing your estate negatively. Make a note only to give away stocks or assets with a gain in value.
This is a good time to move money out of your estate, if you need to. You may also want to consider giving away low-interest loans to relatives or loved ones you can trust to repay you. You may end up with gains in the future, but for now, you’ve lowered the value of your estate.
Planning for estate taxes can get tricky. Your attorney can help you look into other options if you want to reduce what you owe and prevent being charged an estate tax.