In times of economic uncertainty, many people postpone estate planning, believing it’s best to wait until the market stabilizes before formalizing their wishes. However, uncertain financial conditions actually make estate planning more important—not less.
Whether the economy is booming or facing a downturn, having a clear and flexible estate plan in place can help protect your assets, provide for your loved ones and better ensure that your wishes are honored, no matter what the future holds.
Putting a plan in place
One of the most important reasons to update or create an estate plan during economic uncertainty is asset protection. Market fluctuations can affect the value of investments, real estate and retirement accounts. By reviewing your plan, you can better ensure that your asset distribution remains fair and consistent with your long-term intentions. Trusts, for example, can be structured to manage assets in a way that adjusts for changing values and provides long-term financial security for beneficiaries.
Tax considerations are also important. During uncertain times, federal, state and local governments may adjust tax laws to respond to fiscal challenges, which could impact estate and gift tax exemptions or income tax rates. Staying proactive with your estate plan will allow you to take advantage of current laws and plan ahead for potential changes. In New York, where both state and federal estate tax laws apply, strategic planning can help minimize the tax burden on your heirs.
Finally, economic downturns are a reminder of how quickly circumstances can change. Health events, job loss or unexpected financial strain can make having powers of attorney and healthcare directives in place particularly pressing matters. These documents allow someone you trust to manage your finances or make medical decisions on your behalf if you become unable to do so yourself.
If you already have an estate plan, reviewing it during a time of financial uncertainty is wise. And if you have yet to put a plan in place, there is truly no time like the present to get started.
