Coronavirus – A Few Planning Points For Individuals and Business Owners
With the worldwide spread of coronavirus, this is an unprecedented and unsettling time. Our health care systems are overwhelmed. Markets have been upended. Social distancing and self-quarantine are terms and practices we are adjusting to.
We are wishing others well and trying to help. Also, for those who are thinking about their personal and closely-held business planning, there are a few points worth considering:
- Are your estate planning documents current? The world is unpredictable (what an understatement!). For most people, estate planning documents are a form of insurance – you do not think they will be needed in the short term, but you have them anyway. Do your estate planning documents reflect your current wishes? Have there been changes in your life and finances that require an update? Are your fiduciary choices (including guardians for minor children) the people you want? If not, this should be addressed.
- For those with taxable estates, the current economic climate presents an opportunity to gift assets (including securities and real estate) out of your taxable estate at relatively lower values. If this applies to you, seize the opportunity.
- Interest rates are also approaching the lowest levels in years. As a result, advanced planning techniques that are affected by interest rates, such as the use of GRATs and sales to intentionally defective grantor trusts, produce even more attractive results to reduce potential estate tax exposure and provide financial security to lower generations.
- Many, if not most, employers are considering significant employment law and insurance issues, including business interruption insurance claims, force majeure clauses in contracts, layoffs or reduced work schedules for staff, determinations as to whether their business is an “essential business” that can continue to operate, and more.
- In New Jersey, property tax appeal deadlines have been extended (currently until May 1).
- New York City Small Business Services is offering grants to businesses with fewer than five employees to cover a portion of payroll costs for two months. New York City businesses with fewer than 100 employees and sales decreases of 25% or more are eligible for no interest loans of up to $75,000.
- Interestingly, “qualified disaster relief payments” made by an employer to employees are generally deductible by the employer but do not count as taxable income to the employees. The coronavirus pandemic has been designated as a disaster by the federal government. As a result, employers can make certain reimbursements and payments to employees. This does not include wages, but could include amounts paid to an employee for reasonable and necessary personal, family, living or funeral expenses incurred as a result of coronavirus. Such payments could include medical expenses, child care expenses as a result of school closures, or increased expenses in the home, such as increased utilities.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.