End-of-year estate planning tips

On Behalf of | Dec 28, 2020 | Uncategorized |

With 2021 on the horizon, many of us can see brighter skies ahead. This year has been extremely hard on most of us. But, if there is one silver lining to this year is that interest rates are extremely low. In fact, they are at historically low levels. This opens up some end-of-year estate planning options.

Intra-family loans

These loans are loans between family members, usually between parents and children or even grandchildren. To qualify as a loan, the interest rate is usually tagged to the Applicable Federal Rate because that is the lowest allowable interest rate. Though, since the rates are currently near zero, these loans are essentially free money, and they can be structured with much more flexibility than traditional commercial loans. For family members looking to start a business, intra-family loans can be a great tool right now.

Depressed business valuations

For tax purposes, the amount of gift tax is calculated on the value of the business at transfer. And, since most business are severely depressed values right now, transferring interests now could avoid substantially higher taxes later when businesses valuations grow. After all, this crazy year will end, and the economy will rebound, raising business valuations for those businesses that can weather this current economic storm.

Individualized plans

For McMinnville, Tennessee, residents, this is only two end-of-year estate planning times. However, each is not appropriate for everyone, and realistically, every estate plan needs to be individualized. No two people have the exact same needs and wants, which is why consulting with an estate planning attorney is so important.