Estate planning during tough economic times

by | Apr 11, 2023 | Estate Planning

The U.S. economy regularly experiences recessions and other periods of decline. While there is not much most of us in Florida can do to prevent economic downturns, we can control how we react to them. There are things we can do to minimize the damage to our personal wealth and maintain a comfortable standard of living until the economy turns around.

This includes your estate plan. A recession can affect the value of your assets, meaning that if you pass away, you will leave your heirs and beneficiaries less in total wealth. However, this can be an opportunity as well as a challenge.

The advantage of giving gifts during your lifetime

Giving large gifts to your loved ones and other intended heirs now instead of waiting until you pass on may be especially advantageous during a downturn. That’s because the value of your ownership stake in a business, real estate holdings and other major assets could drop enough to slip below the federal gift tax thresholds. This gives you the chance to pass on an asset as a gift during your lifetime without the recipient having to worry about paying a big tax bill.

The IRS has said the limit for gift-giving from a living person and passing on assets through probate will be $12.92 million for 2023. This figure changes from year to year, but for most people, this is more than enough, especially considering it applies to both members of a married couple separately. Keep in mind that in 2026, the gift/estate tax exemption is expected to revert to $7 million.

Get help to avoid a costly mistake

If you are considering making a large gift as part of your estate planning strategy, you may need to consider factors like the exact value of the gift and how much of it to give this year. Advice from your estate planning attorney can help you avoid unintended consequences.


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