Broker Check

Is Your Estate In Order?

| April 24, 2020
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We hope you and your families are safe and healthy during this crisis. Although we have seen glimmers of hope on the horizon through the possibility of vaccinations, treatments and a reopening of portions of the economy, it’s important to remember that we must continue to be a part of the solution in conquering this virus. Once again, we thank all those on the front lines combating the virus, including our nurses, doctors, medical professionals, service members and essential workers. Their dedicated actions help keep us all safe and out of harm’s way.  


If the recent pandemic has made you think more about your future, your family, and your finances, you are not alone. In recent weeks and in preparation for worst-case scenarios, a demand for wills and financial preparedness has surged. The threat of COVID-19 has spurred many clients to review and assess their estate plans. 


But what about individuals who already have their estate plan in place, like many of our clients do?  Below, we have a few suggestions you may want to consider and discuss further with your advisor.  


Required Minimum Distributions (RMDs) temporarily waived from qualified retirement plans and IRAs for the calendar year 2020. With the new CARES Act, account owners can retain tax-deferred savings until at least 2021. For those who have already taken their RMDs for 2020, the CARES Act will not allow for repayment back into their retirement plan, but there is a 60-day period to allow for RMDs to be rolled over into an IRA. Retirement account owners will be able to take advantage of this relief and avoid paying income taxes on the RMD. Also, in this waiver, beneficiaries of IRAs can skip the distribution this year only. 


Tax-loss harvesting mindfulness during a market downturn. Using this strategy may decrease your current taxable income and allow for tax loss carry forwards to offset future capital gains resulting in higher after-tax returns. Be aware of wash sale rules when selling securities at a loss. 


Make an annual gift exclusion, tax-free up to $15,000. This tax-free gift does not count against your lifetime gift tax exclusion. Gifting marketable securities (as a gifted asset) when volatility  is high, and valuations are low may offer an added boost if these securities recover.  Liquid cash reserves are a good source too.  


Make IRA conversion when the markets are down. Essentially, converting a Traditional IRA to a Roth IRA now results in paying taxes on current values of IRAs which are likely lower due the stock market decline. This strategy can allow for greater tax free accumulations without mandatory distributions. 


Charitable Contribution Deduction for those contributions made in cash to qualifying charities. The CARES Act allows an “above the line” charitable deduction of up to $300 in addition to the standard deduction. The CARES Act also lifted the 60% adjusted gross income limitation for cash contributions to qualified charities. These contributions to qualified charities are now 100% deductible off adjusted gross income in 2020. Donor advised funds do not qualify for this provision. Deductions for contributions of food and inventory by businesses has also been increased from 15% to 25%.


Grantor Retained Annuity Trusts (GRATs) - the effectiveness of this estate planning tool increases when interest rates are low and market values are low, which is the current environment we are in. The objective of a GRAT is to shift future appreciation on the assets contributed to the GRAT to others at a minimal gift tax cost.  Clients with current GRAT terms should probably keep them going, and clients without GRATs should consider utilizing them.  GRATs can be extremely versatile and can be designed with significant estate and income tax savings in mind.  They allow the grantor to continue to receive income from the trust assets for a determined number of years. They can also be a good tool to use in a business succession plan. 


These recommendations are just a few preparedness measures to be aware of during this market downturn.  Consider having a discussion with your advisor about which course of action is best for your unique financial situation as this might be a good opportunity to review or create your estate plans, including powers of attorneys, healthcare proxies, and retirement structures.  


Thank you again for your continued trust and confidence in Private Capital Group. We will remain consistent in our goals and philosophies to provide exceptional service and dedication to you, our valued clients.  Please do not hesitate to reach out to your advisor or anyone on the Private Capital Group team. We are here to help guide you through this pandemic and the financial ramifications. 


Please be sure to continue to follow the recommendations of our health officials and the CDC and keep yourself, your families, and your communities as safe and healthy as possible during this time. We can all be a part of the solution.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Private Capital Group, LLC (“PCG”), or any non-investment related content, made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Information contained in this communication is based on data gathered from what we believe are reliable sources. It is not guaranteed by PCG as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. Further, you should not assume that any discussion or information contained in this communication serves as the receipt of, or as a substitute for, personalized investment advice from PCG. To the extent discussed herein, investment indices are unmanaged and cannot be purchased directly. Historical performance results for investment indexes and/or categories are included for informational purposes only and generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PCG is neither a law firm nor a certified public accounting firm and no portion of the communication should be construed as legal or accounting advice. A copy of the PCG’s current written disclosure Brochure discussing our advisory services and fees is available upon request.
Please Note: Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W. Dry Creek Circle, Suite 575, Littleton, CO 80120, 303-797-9080. Private Capital Group, LLC   is not affiliated with The Leaders Group, Inc. If you are a PCG client, please remember to contact PCG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. PCG shall continue to rely on the accuracy of information that you have provided.
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