It’s understandable why people consider estate planning to be a luxury during difficult economic times. They might look to avoid the upfront costs of setting one up or making significant updates in preparation for a recession. But the truth is, protecting your financial nest egg is even more important during a financial downturn.
For Georgia residents and business owners, having a legally recognized, enforceable estate plan in place stands to save you and your beneficiaries exponentially from the guaranteed expense and losses you could experience without the right plan in place.
Why an Estate Plan is a Necessity, not a Luxury, During a Recession
Between higher unemployment and lower values on assets like homes and businesses, your existing wealth could dwindle if you’re not prepared. Should you pass away before you protect your assets, your beneficiaries could actually end up taking a loss during a recession. Fortunately, there are many ways to protect your assets and your heirs.
It’s essential to be prepared and to work with an estate planning attorney to set up or amend your estate plan to make it as recession-proof as possible.
Protect Your Assets in Times of Economic Uncertainty
A recession makes the public vulnerable to job loss and loss of other expected income like bonuses, pay raises, retirement plans, and overtime pay. That can happen at any stage of life, and if you want to protect any existing assets, you shouldn’t ignore the benefits of estate planning.
There are different kinds of trusts you can use to shelter and protect your existing wealth from creditors and taxes. An Irrevocable Trust is among the most common and beneficial. 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. It is important to act sooner than later as your estate plan cannot protect your wealth from existing collectors, only future collections.
An Irrevocable Trust can also help protect your benefits and assets while minimizing taxes so your out-of-pocket expenses are lowered, and your family is protected from probate.
Why Gift Your Assets During a Recession
When the fair market value of real estate and business assets decrease during a recession, the owners can gift larger percentages of them out of their estate. This will save business owners on taxes, and can stand to benefit heirs as well.
When the economy normalizes, the appreciation value tends to increase as well, increasing the impact of the gift in the long run.
The 2017 Tax Cuts Job Act is currently in effect until 2025, meaning, for business owners, the amount of your estate that you can gift is $12.06 million. That will presumably change back to less than $5.5 million when the TJCA ends.
Ready to secure your financial future with an estate plan?
Investing in an estate plan now can save you and your beneficiaries from major expenses without having the right legal and financial protections in place. If you are ready to discuss building an estate plan or want to make sure your existing plan is updated to safeguard you and your family, contact the estate planning experts at Smith Barid today.