Planning opportunities when asset values decline

A sharp pullback in the stock market can bring anxiety to investors. Business owners and investors in the private sector similarly become fearful of what market volatility could mean for their future. Although market uncertainty may leave some individuals with a growing fear of the unknown, many others believe that, as in the past, downturns are just part of a cycle and higher values and happy days will come again.

No matter your outlook during a market pullback, the depressed values of assets do shed some light on otherwise difficult circumstances—this may lead to an opportune time to take advantage of certain estate planning strategies using assets when prices are low and possibly undervalued. The Internal Revenue Service (IRS) limits the ability to make lifetime gifts to heirs (e.g., children, grandchildren, other family members, and friends). Generally, the two main tools we have are the annual exclusion and the lifetime exemption. In 2023, the annual exclusion allows a taxpayer to give up to $17,000 to any number of individuals ($34,000 per married couple). Any gifts in excess of this amount count against the taxpayer’s $12.92 million lifetime gift tax exemption in 2023 ($25.84 million for married couples).¹ Utilizing assets that have decreased in value to make a lifetime gift, and capturing the “rebound” in an asset outside of one’s taxable estate, can be extremely beneficial and tax efficient. This whitepaper focuses on why estate planning in an uncertain market environment may be something to consider.

Please note: The complete publication, including important information and disclosures, can be downloaded via the link below.

¹ Under the Tax Cuts and Jobs Act of 2017, the $11.7 million lifetime gift tax exemption is scheduled to revert to $5 million, indexed to inflation to 2010, in 2026.