Preparing for the Unexpected: Estate Planning in Uncertain Times
Uncertain times are inevitable and planning ahead is the best way to prepare yourself and your family for unforeseen hardships. When it comes to protecting your assets in economic ebbs and flows, the first line of defense is reviewing your estate plan to ensure you are utilizing the best strategies now and for the future.
No one can predict what’s ahead, so setting up an emergency fund is important during uncertain economic times. Emergency funds can help during mundane incidents like a broken down vehicle or can be a lifeline for more serious events like a medical emergency, loss of employment, or market instability or recessions. Establishing an emergency fund can provide you with the means to recover without having to withdraw from your long-term investments or sell assets.
When planning for unexpected circumstances, one of the best ways to protect your assets is establishing a trust. There are two different trusts to consider: irrevocable and revocable. Irrevocable trusts cannot be changed by you once created unless the change is elected by the desired trustee. However, forfeiting control of the assets can protect from creditors and lower your personal tax liability. Revocable trusts allow you to maintain control of the assets placed in the trust and gives you the authority to designate who receives them after death. And although revocable trusts do not offer the additional asset protection like irrevocable trusts, they are still great tools especially for someone who wants to keep control of their assets. An additional benefit of establishing a trust now is that assets held in the trust typically avoid probate, which can simplify the process and provide added advantages for your estate.
You should review and update your estate plan and any legal documents periodically as any life changes will require updates to appropriately ensure the estate plan remains strong. In times of volatile market conditions or other economic uncertainty, the operations of your estate plan can change, so making sure your current goals are reflected correctly is important. This includes reviewing and updating any beneficiaries regularly, and diversifying your investments to reduce market exposure and help protect your money.
These tips can help set you up for success, offering more clarity and control, reducing the chance of conflict, ensuring care for loved ones, and preparing you for unexpected financial challenges. For personalized advice on establishing an estate plan and understanding its potential benefits, please reach out to your accounting or wealth management professionals.