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Top Strategies for Estate Planning and Protection During Market Volatility

Top Strategies for Estate Planning and Protection During Market Volatility

Periods of market volatility can dramatically affect an individual’s estate and assets. However, some strategies allow you to capitalize on the changes that arise during these volatile periods, benefiting you in the long run.

Explore the best strategies for estate planning and protection during market volatility and learn how working with an estate planning attorney can help.

5 Strategies for Estate Planning and Protection During Market Volatility

During a volatile market, you can take advantage of minimal tax liabilities, changing interest rates, high inflation, and Roth IRAs with the following strategies:

1. GRATs

Grantor retained annuity trusts (GRATs) allow wealthy families to minimize their tax liabilities while transferring sizable sums of money to a family member. The grantor can lock assets in a short-term irrevocable trust, and when the trust expires, the beneficiary will receive the assets with minimal or no gift tax liability. While the assets remain in the trust, the grantor receives a yearly annuity payment.

2. Annual Exclusion Gifts

Annual exclusion gifts fall outside the gift tax realm and therefore do not require gift, estate, or GST exemptions. Once a year, an individual can give a gift of up to $16,000 per donor.

Some choose to give an annual exclusion gift at the beginning of the year, so any increase in value over the year will technically be outside their estate. Married donors often use gift splitting to double the amount they can give to a recipient. If both spouses consent, a married donor can give up to $32,000 to a single recipient.

3. Full Use of GST and Gift Exemptions

During periods of higher inflation, individuals should consider taking advantage of the high exemptions for gift and GST (generation-skipping transfer) taxes. The exemption amount is indexed for inflation. With inflation rates soaring to their highest levels in 40 years, the exemption amount in 2022 has reached a whopping $12.06 million.

In 2026, the exemption amount is scheduled to revert to $5 million. Taking action now will allow you to reap the benefits of inflated exemptions so you can protect your assets in the long term.

4. Low-Interest Rate Loans

In most situations, loans must have a minimum amount of interest. The IRS establishes this minimum interest rate monthly via Applicable Federal Rate (AFR) publishings. When interest rates are low during periods of market volatility, individuals have a unique opportunity to take advantage of low-interest rate loans.

Some efficient strategies in a low interest-rate environment include:

  • Charitable Lead Annuity Trust (CLAT)
  • Private annuity
  • Intra-family loan

5. Converting Traditional IRAs to Roth IRAs

Roth IRAs (individual retirement accounts) typically offer more favorable tax treatments than traditional IRAs. Under Roth IRA rules, if you are 59½ years or older and have owned an account for five years, you can make tax-free withdrawals.

The amount you are allowed to contribute to a Roth IRA changes periodically. In 2022 the contribution limit is $6,000 per year ($7,000 per year for those 50 and older).

Find an Estate Planning Attorney at FSKS

FSKS is a complete legal service provider offering expert estate planning and administration assistance. We provide innovative solutions that cater to the specific financial needs of each client in areas including asset protection, estate planning, guardianships, power of attorney, trusts, wills, and health care directives.

If you require assistance or have any questions about an Estate Planning or Administration matter, don’t hesitate to get in touch with James E. Shepard ( or Jennifer Holowach ( at 973-538-4700.