Estate planning is often thought of as something separate from the markets. You create a will or trust, name beneficiaries, decide how assets should eventually pass to the people and causes you care about, and then move on.
But for families actively implementing an estate plan, when assets are transferred can matter almost as much as how they are transferred.
That is especially true during periods of market volatility.
When investment values temporarily fall, certain planning strategies can become more efficient. A gift-tax exclusion may allow you to transfer more shares. A Roth conversion may generate less taxable income. More sophisticated estate-planning techniques may allow a greater share of a future recovery to occur outside of your taxable estate.
In other words, a market decline does not necessarily change your estate-planning goals. But it can change the economics of achieving them.
And that creates an interesting counterintuitive opportunity: while the natural reaction to falling markets is often to wait for things to recover, waiting can sometimes make an estate-planning strategy more expensive.
A Roth Conversion May Cost Less
Roth conversion strategy is often discussed in the context of retirement and tax planning, but it can also play an important role in estate planning. Converting traditional retirement assets to Roth means paying the income tax today, but it can leave heirs with a more tax-efficient asset whose qualified distributions are generally income-tax-free.
For someone who already intends to make a Roth conversion, a market downturn can create an opportunity to accomplish that goal at a lower tax cost.
Consider an investor who has determined that converting a portion of a traditional IRA to Roth makes sense. Suppose the investments they intend to convert are worth $100,000. At a 24% federal marginal tax rate, the conversion would create an illustrative federal tax bill of $24,000.
Then the market declines 20%, reducing the value of those same investments to $80,000.
Converting while values are lower would create $80,000 of taxable income and an illustrative $19,200 federal tax bill. That’s $4,800 less than converting before the decline.
Now suppose the investor instead waits until the position recovers and eventually reaches $120,000. Converting then would generate $28,800 of federal tax at the same 24% rate.
In other words, waiting until the investment “felt safer” increased the taxable conversion amount by $40,000 and the illustrative tax bill by $9,600. Meanwhile, the investor who converted at $80,000 captured the subsequent recovery inside the Roth, potentially creating a larger pool of tax-efficient assets for either their own retirement or their heirs.
Lower Values Can Stretch Annual Gifts
The same principle can apply to gifting.
In 2026, an individual can give up to $19,000 per recipient under the annual gift-tax exclusion. If a stock trades at $100 per share, that $19,000 gift transfers 190 shares.
If the stock falls 20% to $80, the same $19,000 gift transfers about 238 shares, roughly 25% more shares under the same exclusion amount.
That does not automatically mean gifting during a downturn is the right decision. Cost basis, potential step-up treatment at death, liquidity needs and the broader estate plan all have to be considered. But for families already planning to make lifetime gifts, temporarily lower valuations can create additional flexibility.
Volatility Can Create a Planning Window
More advanced strategies, such as Grantor Retained Annuity Trusts (GRATs), can also become more attractive when asset values fall. A GRAT allows someone to transfer assets expected to appreciate while retaining annuity payments for a specified period. If those assets subsequently appreciate faster than the IRS-assumed rate, some of that excess growth may ultimately pass to beneficiaries outside the taxable estate.
That can make temporarily depressed assets particularly interesting: if the investment rebounds during the trust term, part of that recovery may occur for the benefit of heirs rather than inside the grantor’s estate. GRATs are highly technical and require careful legal and tax planning, but they illustrate the same broader principle: lower valuations can sometimes create a window for transferring future growth more efficiently.
The broader lesson is not to make major planning moves simply because markets are down. It is to recognize that when a strategy already makes sense, market prices can affect when it makes the most sense to act.
At Hanover Advisors, we believe investment management, tax planning and estate planning should be considered together. Periods of volatility can be uncomfortable, but they can also create opportunities that may not be available once markets recover.