Timing is Everything

When markets are down, opportunities abound. People interested in reducing the size of their estates can often maximize their gifting during downturns in the market, both real estate and stock. With respect to real estate, one can gift their residence to their children, retaining the right to live in it, by use of a qualified personal residence trust (QPRT). An article by Mike Spector in The Wall Street Journal indicates that, due to the falling value of many homes, this is the ideal time to make such a gift. Another gifting strategy is available for people who have charitable inclinations. A Charitable Lead Trust (CLT) provides that a charity gets the income from the trust for a set term and then the grantor's heirs receive the remainder. A CLT funded with stock that is likely to rebound and appreciate over the long haul is ideal. If you want to skip giving anything to charity, outright gifts of such stock up to the annual exclusion amount of $12,000 is another possibility. You say you don’t like to gift? Consider selling depreciated stock at a loss to offset any capital gains or to a lesser extent ordinary income. If you fail to see the silver lining in these various strategies, you can do what many people are currently doing…wait for the market to rebound.