Older couple sitting with estate planning attorney

Why it’s Important to Estate Plan in an Economic Downturn

Planning for the future during an economic boom is fun. Optimism and joyful speculation give your estate plan a rosy glow, and it may seem the sky’s the limit. Nonetheless, there is much to be said for the realistic, protective mindset that accompanies estate planning during an economic downturn. In either case, having an experienced estate planning attorney at your side during the process will stand you in good stead.

At Surprenant & Beneski, P.C., we help clients throughout Southeastern Massachusetts plan their futures with foresight no matter the state of the economy. It is important to plan your estate during a recession when potential risks may loom larger than at other times. “Waiting out” economic downturns to start estate planning can be a big mistake. Here’s why:

1. There Are Growth Opportunities During an Economic Downturn

As business and real estate values plummet by as much as 20 percent, it may be the right time to transfer a business, stock, or assets to loved ones at a lower tax cost. Therefore, this is a good time for corporate owners to redeem stocks and transfer a larger portion of their company to heirs or pivotal employees. 

For the best insight into how you can benefit from present circumstances and the immediate future, it is essential to consult with a knowledgeable estate planning attorney who understands the intricacies and implications of an economic downturn.

2. Establishing Trusts Can Save You Money and Protect Your Assets

Whatever your age, responsible estate planning includes planning for your mortality. While creating trusts will cost you more than simply having a will drafted, in the long run, it can save your estate thousands of dollars. Even considering administrative fees, protecting your assets by creating trusts is an effective way to prevent excessive taxation and save by avoiding the expenses, not to mention the delays, of probate. 

Creating trust has the added advantage of protecting your assets if you become incapacitated and unable to make effective financial decisions. Establishing trusts also enables you to preserve funds for a minor child, a special needs beneficiary, or a beloved pet. During a period of economic downturn, it is important to protect not only your assets but those you love, especially those who are most vulnerable.

3. Being Proactive Can Protect Your Family 

As we know from dealing with expected storms, preparation is the best protection. Taking the following steps may not be easy but it will provide you with a tightly woven safety net if the economic downturn becomes worse than expected:

  • Prepare an emergency fund to keep you and your family afloat if your income falters
  • Control your finances more tightly by limiting expenditures for unnecessary items
  • Diversify your portfolio, focusing on the safest investments (e.g. your 401(k) or IRA)
  • Pay down debts to keep your finances stable
  • If possible, find another source of income, preferably in an industry less likely to be affected by economic downturns, such as consumer goods, healthcare, or IT.
  • Whether you can take on another job or not, learn new skills to make it possible to do so in the future
  • Create and stick to a budget, one that includes saving to add to your emergency fund

The Takeaway

Putting off your estate planning during an economic downturn is a dangerous form of denial. Whether you are a high-net-worth individual or a person of moderate means, there are ways to take advantage of the changes in the economy and risks you should be careful to avoid. This is the right time to make an appointment with one of the trustworthy estate planning attorneys at Surprenant & Beneski. Contact us today for a personalized consultation.