"It’s an ill wind that blows nobody good "
–old proverb
The current low valuation levels in the financial markets present some unique opportunities for estate tax and income tax planning. Low values give the opportunity for transferring assets on very advantageous terms, freezing low values, and recognizing losses for income tax planning.
Here is a list of excellent strategies reprinted from North Carolina Estate Planning Blog:
1) If you are not selling options or using margin trading, you should revoke your margin agreements. This reduces your risk by ensuring that your securities are not lent.
2) Roth IRA conversions should be aggressively reviewed.
3) Loss Harvesting, while remaining in the market should be reviewed.
4) For now, if you have over $100,000 [over $250,000 for IRAs and certain other retirement accounts] in one bank you should consider using several banks.
5) GRATs to freeze (for tax purposes) the value of depressed stocks should be implemented.
6) Large gains should be taken under the 15% tax rate compared to a higher future tax rate.
7) Tax efficient asset allocation between Roth’s, Qualified Plans and outside accounts should be reviewed.
8) Parents should aggressively gift and sell closely-held business interests to trusts for children and Grandchildren.
9) Taxable Gifts, incurring a gift tax, will be in vogue under a new administration.
10) Oil and Gas will continue to provide tax and financial planning opportunities.
11) Have an expert review all life insurance policies.
12) Consider funding dynasty trusts today ($2,000,000) and on January 1, 2009 ($1,500,000). [Or a total of $3,500,000 in 2009]
From Bob Keebler, CPA