Spencer Law Firm LLC
717.207.7935 866.639.5451


'Tis an ill wind that blows nobody any good.

Someone profits by every loss; someone is benefitted by every misfortune.

The decline in the stock market, despite its cause, presents us with a tremendous estate planning opportunity. Make gifts now!

The most basic reason for estate planning is to provide for those you love, and gifts are the simplest estate planning technique. They are easy to understand and easy to implement. Keep in mind the goals of all tax planning: Lower taxes. Higher future wealth. Either way you look at it, the current depressed values of many stocks represent a tremendous opportunity to make gifts.

Much of estate planning is devoted to reducing the value of assets, so that more leverage can be obtained, by making gifts using the $12,000 per year annual exclusion and the currently available $1 million exemption from the gift tax. Now the markets have done this for us. Now is the perfect time to be making gifts of securities.

Don't wait until the end of the year. Make your gifts now. Don't wait for the market to recover. Make your gifts now. Give away the assets that are at the lowest values. Give away the ones that sank to the bottom. Use this opportunity to get future appreciation in the value of stocks out of your estate.

Most people would agree that the value of an asset 25 years from now will be the same despite the current market decline. If you assume that $1 invested in an S&P 500 index fund would increase in value at the rate of 10% per year, 25 years from now, that dollar would be worth $10.83. If a married couple made gifts using their unified credits last year, they would have made gifts of $2,000,000. In 25 years this would be worth $21,660,000. Today, however, last years $1 invested is worth about $0.65. If it will still be worth $10.83 in 2025, that implies an average rate of return of 12.4% over the next 24 years.

Using more sophisticated techniques, the already reduced value of stocks can be reduced even further for transfer tax purposes. This is the perfect time to make a Family Limited Partnership and make gifts of the limited partnership interests. It is the perfect time to create Grantor Retained Annuity Trusts (GRAT's). It is the optimum moment to make a Dynasty Trust. These techniques offer even more leverage and make the estate tax savings even more dramatic.

Seize the opportunity.

Joshua Kennon, writing for About.com puts it in perspective: Remember that the real goal of prosperity is to provide a better life for yourself, your family, and everyone you come in contact with. Our blessings, gifts, and finances only realize their true value when you give them. The guaranteed way to feel wealthier is to give what you already have. You see the joy it can bring others, and you realize that you have a lot more where it came from. The feeling of generosity and happiness that comes with giving is the true kind of wealth we are pursuing - and it's something that money can't buy.

No Comments

Leave a comment
Comment Information

We’d Like to Hear From You

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Contact Information

Spencer Law Firm LLC
320 Race Ave
Lancaster, PA 17603

Toll Free: 866-639-5451
Phone: 717-207-7935
Lancaster Law Office Map

  • MS Logo The American College of Trust and Estate Counsel
  • Super LawyersAV Peer Review Rated
  • fig | figmagazine.com