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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

The first blog in this series titled, “<a href="http://wnj.com/updates/estate-and-tax-planning-ideas-for-a-covid-19-economy-part-1/" target="_blank" rel="noreferrer noopener">Estate and Tax Planning Ideas for a COVID-19 Economy – Part 1</a>,” offered strategies for use in a depressed market to make impactful gifts to your family. In this follow-up blog, we explore how depressed values in the markets and current low interest rates have created some excellent opportunities to generate potentially significant tax savings, especially for those that are charitably-inclined. The four planning tools described below could help the tax situations for many clients.

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Supercharge&nbsp;charitable planning to public charities The Coronavirus Aid, Relief and Economic Security Act (CARES Act) enacted in March allows taxpayers to deduct charitable contributions up to 100% of their adjusted gross income (AGI) for “Qualified Charitable Contributions” made in 2020. This limit was increased from 60% of AGI for 2020 only, but will create an additional reason to make large gifts to meet the increased needs of charitable organizations responding to the COVID-19 pandemic.

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Consider making Qualified Charitable Distributions from an IRA Individuals with IRAs should also consider a “Qualified Charitable Distribution” (QCD) from their IRA. The QCD rules allow IRA holders over age 70 ½ to direct up to $100,000 to a charitable organization from their IRA. The QCD rules, like the new 100% of AGI rules under the CARES Act, require that the IRA funds be directed to charities other than private foundations, supporting organizations and donor-advised funds.

Convert a traditional IRA to a Roth IRA Because a Roth IRA account is funded with after-tax dollars, income tax is not owed on distributions from the account, and the assets can grow tax free. Plus, Roth IRAs do not have a minimum distribution requirement during your lifetime. Conversion from a traditional IRA to a Roth IRA may make sense in the current environment because:

&nbsp;Harvest tax losses Take advantage of depressed securities and use the opportunity to sell them at a loss to offset capital gains on other portfolio assets. (Tax-loss harvesting also can apply to the assets in your grantor trust.)

Take advantage of current tax planning opportunities

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Now is a good time to explore planning ideas that are effective in the midst of a market downturn. These tax planning opportunities may offer tax efficiency for your situation. For more information on wealth planning strategies for individuals and families, please contact your Warner estate planning attorney,&nbsp;<a href="http://wnj.com/people/jay-a-kennedy/" target="_blank" rel="noreferrer noopener">Jay Kennedy</a>&nbsp;in our Tax Group (248.784.5180 or&nbsp;<a href="mailto:jkennedy@wnj.com" target="_blank" rel="noreferrer noopener">jkennedy@wnj.com</a>) or our Private Client and Family Office Practice Chair,&nbsp;<a href="http://wnj.com/people/mark-k-harder/" target="_blank" rel="noreferrer noopener">Mark Harder</a>&nbsp;(616.396.3225 or&nbsp;<a href="mailto:mharder@wnj.com" target="_blank" rel="noreferrer noopener">mharder@wnj.com</a>).

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Estate and Tax Planning Ideas for a COVID-19 Economy – Part 2

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Estate and Tax Planning Ideas for a COVID-19 Economy – Part 2

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