News & Articles

Planning Opportunities to Consider for the Remainder of 2020

Published on November 2nd, 2020

We are all recognizing the effects of the pandemic this year, in many different ways. However, reviewing your estate and gift planning now can present some great opportunities prior to the end of the year. We have substantial federal estate, gift, and generation skipping transfer tax exemptions available today, though this and income and capital gains tax rates may change in the near future based upon the results of this year’s election. We also have low interest rates available, matched with depressed asset values in many cases. While we understand the uncertainty can be unsettling, we are standing by ready to serve as your trusted advisors to help you navigate the remainder of this year and take advantage of opportunities during these rapidly changing times.

1. State & Federal Exemptions

While our State of Washington estate tax exemptions are $2,193,000 for each individual, the federal estate, gift, and generation skipping transfer tax exemptions are $11,580,000 for each individual through the end of 2020. The federal exemption is to increase each year until it sunsets effective January 1, 2026. Yet, depending upon this year’s election, a decrease in the federal exemptions could occur much sooner. In this case, if you do not use this exemption, you will lose it. This may not be a consideration for everyone, but if you are a high net worth individual, the use of your exemptions should be discussed as soon as possible.

2. Gift Planning

Given the low interest rates and depressed asset values, there are specific gift planning techniques that are especially appropriate during this time. Grantor retained annuity trusts (GRATs) provide an opportunity to transfer appreciating assets to beneficiaries while optimizing the use of your gift tax exemption given the low interest rates. Loan interest rates may also be used for intra-family loans, whether loans to invest in other assets or for seller financing when selling assets to family members or trusts. Of course, while we do not wish for depressed values, such depressed values may provide an advantage as to timing of transferring assets, whether a sale or a gift.

3. Annual Exclusion Options

Of course, each person has opportunities to reduce their estate annually without using their estate and gift tax exemptions. Each individual may gift the annual exclusion amount (currently $15,000 per person per year) to reduce their estate. Each individual also has the opportunity to gift up to five years of the annual exclusion (currently $75,000) in one year to a beneficiary’s Section 529 college savings plan. Additionally, an individual may pay for another individual’s health care or education expenses: as long as paid directly to the institution, such payments will not reduce the available annual exclusion or use the available gift tax exemption.

It is an important time to consider a review of your assets, as well as a discussion regarding your goals and needs. We are here to help you take advantage of opportunities in planning for your family’s future during these uncertain times. We look forward to hearing from you.

Kari Brotherton can be reached at [email protected]
Derek Crick can be reached at [email protected]
Joel Paget can be reached at [email protected]
Hans Juhl can be reached at [email protected]
Linda Naish can be reached at [email protected]


Ryan Swanson’s Estate Planning & Probate Group

What happens to wealth is more than a legal and tax issue—it’s an emotional one that can challenge any family. Ryan Swanson’s Estate Planning & Probate attorneys are highly experienced with estate-related matters including planning, probate, administration, disputes, and guardianship. In every situation, our common-sense approach helps everyone involved understand their options and make informed decisions.

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