During an economic downturn, the fair market values of real estate, asset holding companies, and operating companies typically fall. For estate tax planning purposes, business owners can benefit from this decline in value. When company values are low, business owners can gift a larger percentage of their company and maximize the impact of estate tax planning.
Giving when values are depressed can help reduce the impact on an individual’s lifetime gift tax exemption and enables individuals to move a greater portion of assets out of their estate. This could also reduce future estate taxes.
In addition, heirs could benefit from the appreciation in value of the assets once the economy normalizes.