Small businesses are struggling economically in light of the COVID-19 pandemic. Many businesses have closed as a result of shelter-in-place orders, and even in states less severely affected by the virus, many non-essential businesses have closed. Further, companies that have remained open are dealing with the fallout stemming from the public’s fear of the spread of the disease. Due to the volatility of the stock market, home builders and others in the construction industry may experience a slowdown in customers seeking to build new homes or renovate as a result of their shrinking investment accounts. Likewise, many other industries are suffering from curtailed discretionary spending and decreased consumer confidence. Employees have also been affected, with businesses forced into schedule reductions, pay cuts and layoffs due to virus-related slowdowns, as well as mandatory or voluntary closures.
This article has been updated to reflect the U.S. Treasury announcement on 3/20. Readers should verify that no further changes have been made to the filing and payment deadlines.
The 2020 tax season is underway, but millions of Americans have yet to start preparing their tax returns. Earlier this week, in response to the COVID-19 pandemic, Treasury Secretary Steven Mnuchin offered taxpayers a 90-day reprieve on paying their income taxes. As of Friday, March 20, the deadline to file tax returns has also been extended by three months. Taxpayers will now have until July 15th to file and pay their 2019 income taxes (up to $1 million). During this time, filers will not incur interest on unpaid taxes or be subject to tax filing penalties. According to Wealth Management, “this reprieve amount would also likely apply to small businesses and pass-through entities. Corporate filers, on the other hand, would get the same length of time to pay amounts due on up to $10 million in taxes owed.” As details continue to be hammered out, tax advisors and estate planning attorneys should expect questions from clients as the new tax filing deadline approaches.
Revocable living trusts are an increasingly popular estate planning tool for married couples. They can be extremely useful for incapacity planning, probate avoidance (including the ability to avoid probate in other states so long as real estate in another state has been properly transferred to the revocable living trust), asset protection, and privacy. Depending on the married couple’s goals and circumstances, an estate plan can include either a joint revocable trust or separate trusts for each spouse. Both options offer advantages and disadvantages. Listed below are several client scenarios that explore whether a joint trust or individual trusts are better.