Accounting For Inflation Concerns In Estate Planning
Rising inflation continues to affect economies in the United States and worldwide, with U.S. inflation rates at their highest levels since 1982. Consumer prices across the U.S. economy rose 7.5% in early 2022 as global supply chain issues, and other factors continue to wreak havoc on Americans’ pocketbooks.
While the growing costs of gas and groceries get most of our attention, inflation can also influence many other aspects of our lives, including long-term financial planning. Many have concerns now about how inflation will impact our abilities to save money, and the value of our retirement accounts, investments, and assets.
What is inflation? Put simply, inflation measures the purchasing power of the dollar. When inflation goes up, our dollars buy less. For example, prices in the U.S. housing market continue to rise and outpace corresponding increases in wages and salaries – making homeownership more expensive on a practical level for most people.
Almost 90% of Americans now state they are concerned about inflation. Inflation fears, in turn, affect how people view their finances, leading to uncertainty over whether what they’ve saved is enough or whether they are planning correctly for the future. Many are looking to cut costs in their daily lives and abandon the idea of estate planning until financial circumstances change.
Now more than ever, it is essential for any adult to consider estate planning – even if they have to account for inflation and changes to interest rates. For estate planning purposes, inflation signals an opportunity to review assets and determine how to minimize risk and safeguard investments. In some scenarios, inflation can benefit savvy investors and increase the value of your estate overall.
Impacts of Inflation on Estate Plans
Some of the more notable estate planning aspects affected by inflation include:
- Tax thresholds for Federal estate tax purposes. The current Federal estate tax exemption is set at $12.06 million until 2025. Due to inflation, this threshold may be changed after 2025 to adjust for changing circumstances.
- Real estate prices. Real estate prices continue to go nowhere but up in the current market. This can help if we have real property to leave behind for heirs, but if you wanted to establish a trust with which a relative can buy a home, you’d have to account for higher costs in future years.
- Planning for nursing home care. If you or your family has saved money for anticipated long-term or nursing home care, those cash savings might not go as far 5 years from now as they would today, based on rising costs. You may need to assess your assets and estate plan more frequently than you would otherwise to ensure inflation does not outpace your savings.
With inflation (and financial uncertainty) on the rise, there is no time to start planning for the future like the present. An experienced estate planning attorney will be glad to sit with you to discuss all options available in today’s market and to help prepare for the future.
The Tampa Estate Planning Attorneys at Strategic Counsel Law Group, L.C., Can Help Ease Your Concerns in Today’s Market
The Tampa estate planning attorneys at Strategic Counsel Law Group, L.C., understand that you may have serious concerns about how your estate planning goals can be met in times of rising inflation and everyday costs. No matter where you are in the estate planning process, we can help you get where you want to be. Please take the next step today by calling our attorneys at 813-286-1700 or schedule a consultation online.