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You've lost a fortune in the market, so give away what's left

October 23, 2008

Estate planners have noted a perverse benefit of the recent bloodletting in the stock markets: when your net worth falls off the cliff, it solves a lot of estate tax problems. It also means you can give away a lot more shares of stock without gift tax than you could six months ago, seeing that they're much cheaper.

Of course, it's hard enough to convince wealthy clients to give property away to their layabout heirs when times are good. As Joel Schoenmeyer points out, it's even tougher when times are bad:

Of course, the problem with making a gift like this in times like these is the psychology. It's already difficult for people to get over the idea that, if they make a gift, the gifted property is permanently gone. Add on the fact that many people feel like any current market conditions are somehow different than what we've seen in the past (this recession/depression will never end, house prices will always go up, etc.). The bold can make a lot of money at times like these, but are you really bold enough to act now?

If you are sufficiently bold, and the market recovers before you die, your layabout heirs will be grateful.

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