Many people prefer to pinch their pennies during a financial downturn, and we understand why many consider estate planning a luxury. It’s reasonable to want to avoid the upfront costs of creating or making significant updates to their estate plan in preparation for a recession. However, for Mississippi residents and business owners, a valid and enforceable estate plan can save you and your beneficiaries both time and money in the long run.
Why You Need an Estate Plan
When sticker shock affects our day-to-day expenses, like gas prices to groceries, shifting our focus to long-term wealth can be challenging. When we look at factors like higher unemployment and lower values on assets like homes and businesses, your existing wealth could quickly dwindle if you’re unprepared. A recession could create a more considerable loss for your beneficiaries. Fortunately, proper planning can go a long way to protect your assets for the future.
The estate planning team at Lancaster Law Firm wants you to be prepared, and we’re here to help you make practical decisions to help make your estate plan recession-proof.
Protect Your Assets in Times of Economic Uncertainty
A recession makes consumers vulnerable to more than employment loss and changes. Other expected income like bonuses, pay raises, retirement plans, and overtime pay could disappear, and it’s essential to take steps to protect any existing assets for the future.
One sensible approach is to create a trust to shelter and protect your existing wealth from creditors and taxes. An estate planning attorney can walk you through the various types of trusts available so you can make the right moves to protect your assets.
An Irrevocable Life Insurance Trust is among the most common and can help protect your benefits and assets while minimizing taxes and lowering out-of-pocket expenses.
Gifting Your Estate During a Recession
A recession can bring opportunities to those planning on gifting their estate. When the fair market value of real estate and business assets fall during a recession, owners can gift a higher percentage of them to beneficiaries. Not only will it save business owners on taxes, but it stands to benefit heirs as well.
When the economy normalizes, the appreciation value also tends to increase, meaning the financial gift will have a more significant impact in the long run.
It should be noted that The 2017 Tax Cuts Job Act is currently in effect until 2025, meaning business owners can gift $12.06 million from their estate. That is set to revert to roughly $5.5 million when the TJCA ends.
Secure your Financial Future Through a Recession
Investing in an estate plan now can protect you and your beneficiaries from economic instability. Contact the estate planning experts at Lancaster Law Firm today to ensure your loved ones are safeguarded during any economic climate.