Economic Recession - A Time to Consider Estate Planning

As of last fall, people have seen their real estate and investment portfolios lose their market value. While this is certainly nothing to celebrate, it does provide an excellent opportunity for estate planning. What is estate planning? Estate planning should be a financial priority at almost any stage of life. An estate plan is absolutely essential for organizing your financial affairs and providing for the well being of your family.

And what about planning your estate?

• By planning for tomorrow today, you can retain more of your assets, protect your estate and leave a lasting legacy for your family. If steps are taken now, it is possible to shift the eventual recovery of value, and the associated taxes, to the next generation.

Why is estate planning important?

• An estate plan defines how you want your assets to be owned, managed and preserved during your lifetime and how you want them dispersed after your death. It ensures a simple, tax-efficient and organized transfer of your assets to loved ones. When one dies his capital assets, including investments and real estate, will be deemed to have been sold at their existing fair market value, at the time of death. Capital gains tax will be payable on the deemed gains.
  

• Estate planning is an important exercise you undertake to preserve your wealth for your family and to arrange for its orderly devolution to your heirs. Where one, presently, owns valuable capital assets that are expected to increase in value over the course of his lifetime, steps should be taken to limit the appraised gain at death to remain at today’s fair market value. The common term for this planning tool is “an estate freeze”. The presumed gain (at death) is capped to today’s values. Additionally, all growth in value accrues to one’s children/grandchildren or to a trust for their benefit, ensuring that the tax bill on that growth is deferred as long as possible. Typically, the tax bill would not come up until the time of their deaths. There are also opportunities to refreeze assets initially frozen in past years at higher values.
  

Please contact us at info@jainfinancial.com if you wish to discuss estate planning or estate freezing arrangements.