Although unstable markets can negatively affect the financial security of people across the country, experts say that market volatility can actually create favorable conditions for estate planning. Although residents of Florida have not been subject to estate taxes as of 2005, families may still be able to take advantage of the estate planning benefits created by shaky markets.

Many estate planning experts believe that now is an ideal time to take financial decisions regarding estate and asset protection seriously for several reasons. First, Congress has temporarily increased the federal gift-tax exemption to $5 million, allowing wealthy families to protect heirs from taxes on their inheritances.

Volatile markets can also lead to lower interest rates, which make it a good time to consider creating grantor-retained annuity trusts, known as GRATs. A GRAT gives its owner the ability to add an asset to a trust while still allowing him or her temporary rights to annuitized payments. Because GRATs typically have short terms, they are a popular tool for families or individuals with depressed stocks, businesses or other assets that are projected to appreciate. Any appreciated value is tax-free. Congress has looked into implementing tighter restrictions on GRATs in efforts to up revenue, but no changes have yet been made.

Market instability can also provide those with large shares in private businesses with a larger discount when they wish to give away their stock. Such discounts are generally around 30 to 35 percent, but unpredictable markets have resulted in the IRS temporarily allowing larger discount rates.

Hopefully this information provides some welcome news to Florida residents who may have been worried about creating an estate plan in turbulent economic times.

Source: Wall Street Journal, "How Volatility Eases Estates Planning," Kelly Greene, Aug. 20, 2011