Coronavirus Crisis Brings Estate Tax Opportunity
A confluence of financial conditions during this challenging time means that some families with very large estates may want to consider taking steps soon that could potentially help them avoid paying federal estate taxes later.


The coronavirus is causing major economic impacts as can be seen with the declining stock market. This adverse impact and the uncertain prospects for the future are a source of concern and worry for us all. However, this set of unfortunate circumstances has created a unique opportunity for the very wealthy to minimize or avoid estate taxes.
There are three factors that play roles in this opportunity:
- The current reduction in investment account values people are seeing in today’s bear market. While no one wants to see their investment accounts plummet, the hopefully temporary reductions in investment values means we can transfer assets out of your estate while using less of your federal gift tax exclusion.
- A hefty federal gift tax exclusion whose days may be numbered. The current lifetime estate and gift exemption is $11.58 million. Under current law, that exemption drops to under $6 million on Jan. 1, 2026. If there is a change in the administration due to the election in November, the exemption would almost certainly be reduced before then. In 2016, many commentators noted the Obama administration’s desire to reduce the exemption to $3.5 million.
- Interest rates at historic lows. The applicable federal rate (“AFR”) for short-term loans (up to three years) is only 0.91%, for midterm loans (up to nine years) is only 0.99% and for long-term loans is only 1.43%. A low interest environment rate makes certain estate play techniques more effective. Grantor Retained Annuity Trusts (GRATs) and Intentionally Defective Grantor Trusts (IDGTs) may be great tools for wealthy Americans seeking to reduce their taxable estates. These are just two of the many tools available.
The time to act could be sooner rather than later, because the ability to use these tools to minimize estate tax may be lost if the political climate changes with the elections in November. GRATs and IDGT mentioned above, and fractional interest discounts for estate tax reductions are just a few of the techniques to minimize estate tax that could be lost.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You should contact your estate attorney, your certified public account, and your financial adviser to determine the steps that are consistent with your family’s long-term goals. While this planning can be complex, it can be completed even if you are unable to leave your home due to the coronavirus quarantine or stay at home orders.
This may very well be the best, last chance opportunity to minimize or avoid estate tax.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Founder of The Goralka Law Firm, John M. Goralka assists business owners, real estate owners and successful families to achieve their enlightened dreams by better protecting their assets, minimizing income and estate tax and resolving messes and transitions to preserve, protect and enhance their legacy. John is one of few California attorneys certified as a Specialist by the State Bar of California Board of Legal Specialization in both Taxation and Estate Planning, Trust and Probate. You can read more of John's articles on the Kiplinger Advisor Collective.
-
AI vs the Stock Market: How Did Alphabet, Nike and Industrial Stocks Perform in June?
AI is a new tool to help investors analyze data, but can it beat the stock market? Here's how a chatbot's stock picks fared in June.
-
Stock Market Today: A Historic Quarter Closes on High Notes
"All's well that ends well" is one way to describe the second quarter of 2025, at least from a pure price-action perspective.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the Fairway
Think of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty Moves
If you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
You Were Planning to Retire This Year: Should You Go Ahead?
If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get It
The Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning Playbook
Consider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
-
Your Home + Your IRA = Your Long-Term Care Solution
If you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
-
I'm a Financial Planner: Retirees Should Never Do These Four Things in a Recession
Recessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
-
A Retirement Planner's Advice for Taking the Guesswork Out of Income Planning
Once you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.