If we have learned anything from the last few years, it is that economic uncertainty is well…always certain. We’ve experienced stock market fluctuations, rising costs of goods, political changes, tax changes, and shifts in Medicaid and retirement planning. The best way to handle the ups and downs of the economy is to be prepared. No matter what the future brings, specific strategies can help ensure that your estate plan, your loved ones, and the assets you’ve worked so hard for are protected. Let’s dive into how you can stay ahead and prepared.
The Risk of Economic Uncertainty on Your Assets
Economic uncertainty can throw your estate plan off balance. The value of your investments, such as real estate, bonds, stocks, retirement accounts, and even the valuation of your house, can fluctuate in value with the market. When the value of your assets decreases, it may reduce the amount you are passing on to your beneficiaries.
Inflation can also affect the value of your savings and how much you pass on to your loved ones. Over time, your loved ones may receive less than you intended. For business owners, there are more risks at stake. Economic changes can affect your company’s profitability and value. Changes in estate taxes, capital gains, and rules can also have an impact on your estate.
Smart Estate Planning Strategies
Estate planning goes beyond simply choosing who gets what when you are gone. Proper planning can help protect your assets and ensure that what you have worked for can survive everything from ever changing tax laws to economic changes. Here are a few valuable strategies to consider that could protect you:
1. Spread out your assets.
Consider spreading out your assets in different types of investments, such as stocks, bonds, and real estate. While stocks often fluctuate, they usually bounce back strong when the economy improves. Diversifying your assets can provide safety during downturns and increase liquidity when you need it.
2. Create a trust.
Trusts are a valuable estate planning tool that can protect your assets from creditors and taxes and provide you with greater control over how you manage and pass on your estate.
3. Set up life insurance.
Life insurance can be a safety net for your loved ones. If the value of your other assets goes down, life insurance provides a guaranteed payout that doesn’t depend on the market. It can also provide quick access to cash when other assets might take time to sell or have lost their value. The money from life insurance can be used to help your loved ones cover living expenses, pay off any debts, or pay taxes.
4. Consider gifting.
Gifting allows you to strategically pass on assets without paying taxes. However, there is a federal limit. With proper planning, you can reduce the size of your taxable estate, stay within the limit each year, and pass assets to your loved ones now.
5. Create a business succession plan.
If you own a business, it is essential to have a clear plan in place to ensure your wishes for the company are honored when you can no longer manage it. Whether your wish is to pass it on to family, sell it, or hand it off to a business partner, stating your wishes can ensure it keeps running smoothly.
6. Relocate your investments.
During unpredictable times, sometimes the best move you can make is to shift towards a more stable and conservative approach. Consider relocating your assets into safer investments, such as bonds or savings accounts. Relocating your assets can reduce the risk while keeping your money working for you.
Hiring an Estate Planning Attorney
Economic uncertainty doesn’t have to drain your assets. Our estate planning attorneys can help you minimize the risk of losing what you have worked so hard for, help protect your family’s future, and make the most out of your estate. The right strategies can keep you prepared and provide a safety net regardless of the changes that lie ahead. Contact us at (256) 251-2137 or by filling out the form below.
