United Airlines said it would try to keep middle seats empty. This photo shows a nearly full flight

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How to not “waste” a crisis

Every cloud allegedly has a silver lining. Estate planners have discovered a potential silver lining in the current economic crisis. Estate planning strategies now may be implemented at a much reduced tax cost, because asset values have fallen.

            At today’s lower

 asset values, much more may be transferred via gift before breaching the taxable threshold of $11.58 million per person.  It’s not just publicly traded stocks that are down in price. Nonmarketable securities, the value of family businesses, and real estate are down similar percentages, according to estate planner Alan Gassman, as reported in Tax Notes. For those who have been contemplating major gifts within the family, this may prove an opportune moment to pull the trigger.

            Roth IRA conversions.  One response to this year’s loss of the stretch IRA for long-term wealth management has been the recommendation to convert retirement assets to Roth IRAs. The immediate tax cost of such a conversion can be hard to swallow. Today’s lower asset values mean lower taxes for conversions now. Should prices recover after the pandemic recedes, all that gain will be tax free.          

            Several estate planning strategies rely upon the “Section 7520” interest rate in determining taxable values of transfers.  As the Federal Reserve has lowered interest rates to help the economy, the 7520 rate has fallen, standing at 1.2% for April 2020 (it was 2.2% in February). Lower interest rates improve the math for some strategies, especially when coupled with reduced asset values.

            GRATs. In a grantor-retained annuity trust, the trust creator is paid a fixed dollar amount for a term of years. If the grantor survives the term, assets pass to the remainder beneficiaries and won’t be included in the grantor’s taxable estate. The GRAT is a useful tool for transferring asset appreciation in excess of the 7520 rate without further transfer taxation.

            Asset freezes.  A grantor may sell an asset to an intentionally defective grantor trust in exchange for a note. If the note equals the value of the asset, there will be no gift tax, it will be a sale for full consideration. The interest rate on the note should match IRS guidelines—for April 2020, the mid-term interest rate is 1.9%. The note will be included in the grantor’s estate, but asset appreciation in the trust assets will pass without further transfer tax, freezing the taxable value. The grantor will owe tax on the trust income, which may further deplete the taxable estate.

            On paper, these strategies appear to confer substantial tax benefits. However, estate planners have been reporting that many clients have not looked at the opportunity with enthusiasm.  There is just too much uncertainty about how the pandemic and its economic fallout will play out. Still, if you’ve been thinking about taking a major estate planning step, this could be an ideal time to move ahead with the plan.

 (May 2020)

© 2020 M.A. Co.  All rights reserved.

Pandemic Delaying Medical Care of Older Americans

THURSDAY, April 30, 2020 (HealthDay News) -- The coronavirus pandemic has led many older adults to postpone medical care, a new survey finds. 

The University of Chicago survey found that 55% of U.S. adults aged 70 and older experienced a disruption in their medical care during the first month of social distancing. 

Thirty-nine percent put off non-essential care and 32% delayed primary or preventive care since social distancing began. And 15% said they delayed or canceled essential medical treatment, the survey found. 

"The first month of social distancing in America certainly saved lives, and yet it also created a situation where many older adults are not getting the care they need to manage serious health conditions," said Dr. Bruce Chernof. He is president and CEO of the SCAN Foundation, an independent charity focused on care of older adults, that co-sponsored the survey.

"As our nation grapples with when and how to reopen, the health care system will reckon with unaddressed medical needs and learn how to maximize new protocols to care for older adults with complex needs in flexible, person-centered ways," Chernof added in a foundation news release.

The researchers found that older adults are worried about delays in getting support to manage their medical conditions. Many doctors, however, are using telehealth to keep tabs on their patients. 

Nearly 25% said that their doctors had reached out to them since the start of the outbreak to check on how they were doing. 

More than 20% had a telehealth appointment since the start of the pandemic. And nearly 50% said it was like having a personal visit. Only 4% said it was worse. 

Terry Fulmer is president of the John A. Hartford Foundation, a survey co-sponsor. "Health care organizations have stepped up quickly to help older adults get their care needs met with this important technology," she said.

"Comfort levels with telehealth vary, but we are seeing rapid uptake in both urgent and primary care delivery. The survey results offer a promising glimpse into the future," Fulmer added.

In all, 83% of older adults said they were ready to self-isolate for several months, if necessary. 

A month into social distancing, however, 33% said they felt lonely. To combat it, many were spending more time on hobbies, watching TV, chatting with family and being physically active. 

Older Americans also said that health care professionals and non-elected public health officials were the most trustworthy, not elected officials. 

The survey of 1,039 adults was conducted April 10 to 15. It has a margin of error of plus or minus 4.28 percentage points.

More information

For more on telehealth, visit the U.S. National Library of Medicine.

SOURCE: John A. Hartford Foundation/The SCAN Foundation, news release, April 27, 2020

Seniors, Getting Off the Sofa Brings Big Health Benefits

Physical activity may help seniors live longer and healthier -- and exercise doesn't have to be intense, two new studies say.

"Finding a way to physically move more in an activity that suits your capabilities and is pleasurable is extremely important for all people, and especially for older people who may have risk factors for cardiovascular diseases," said Barry Franklin, past chair of the American Heart Association's Council on Physical Activity and Metabolism.

Brisk walking, for example, can help manage high blood pressure and high cholesterol, and improve blood sugar, Franklin said in an AHA news release.

Here's the evidence:

One study of more than 1,200 U.S. adults, average age 69, found that those who did at least 150 minutes a week in moderate to vigorous physical activity were 67% less likely to die of any cause during the study period than those who didn't do that amount of exercise.

However, even light exercise was beneficial. Each 30-minute session of light-intensity physical activity -- such as household chores or casual walking -- was associated with a 20% lower risk of death from any cause.

In comparison, each additional 30 minutes of inactivity was associated with a 32% higher risk of death from any cause, according to the study.

The results were scheduled for presentation Thursday at an American Heart Association meeting, in Phoenix.

"Promoting light-intensity physical activity and reducing sedentary time may be a more practical alternative among older adults," said study author Joowon Lee, a researcher at Boston University.

The other study -- also scheduled to be presented at the AHA meeting -- included more than 6,000 U.S. women, average age 79.

Those who walked 2,100 to 4,500 steps a day were up to 38% less likely to die from heart attack, heart failure and stroke than those who took fewer than 2,100 steps a day.

Those who walked more than 4,500 steps a day reduced their risk by 48%, according to the study.

"Despite popular beliefs, there is little evidence that people need to aim for 10,000 steps daily to get cardiovascular benefits from walking. Our study showed that getting just over 4,500 steps per day is strongly associated with reduced risk of dying from cardiovascular disease in older women," said study lead author Andrea LaCroix, a professor and chief of epidemiology at the University of California, San Diego.

"Taking more steps per day, even just a few more, is achievable, and step counts are an easy-to-understand way to measure how much we are moving," LaCroix said in the release.

She said there are many inexpensive wearable devices on the market.

"Our research shows that older women reduce their risk of heart disease by moving more in their daily life, including light activity and taking more steps. Being up and about, instead of sitting, is good for your heart," LaCroix said.

Data and conclusions presented at meetings are usually considered preliminary until published in a peer-reviewed medical journal.

More information

The U.S. National Institute on Aging has more about exercise.

SOURCE: American Heart Association, news release, March 5, 2020