Your estate plan is largely a reflection of your values and your relationships. Your wishes may change when your relationships with different family members evolve over time. You may need to add more information to your estate plan as you acquire new property or add new family members to your list of beneficiaries.
Although estate planning changes are often the result of a change in your personal circumstances, sometimes the change that you must address is on a bigger scale. The economy plays a major role in your estate planning decisions. When macroeconomic circumstances changes, you may need to revisit your estate plan and reconsider your previous choices.
What current economic factors might justify reviewing and updating your estate plan?
The cost of many items, from groceries to durable goods, has increased substantially in the last 12 months. Inflation has affected many areas of the economy, which means that workers earning what they did a year ago now have less buying power than previously.
Inflation issues are obviously a serious concern for those preparing to live on a fixed income during retirement or supporting another adult with a special needs trust. Inflation concerns may influence how you divide your assets among your loved ones or may require that you reevaluate what you do with certain property.
Changing real estate prices
The longer you have remained at the same home, the easier it is for you to have an appreciation for the long-term nature of real estate market changes. Overall, property values tend to increase over time.
However, sometimes property values go up faster than normal or decline because of economic or local factors. After many years of price growth, some markets now report price stagnation. Others report declining sale prices in recent months. Changes to your property value can influence everything from the risk of estate taxes to the most prudent way to pass your real estate to the next generation.
When you see how inflation or changing house prices could complicate your retirement or your legacy, you may need to identify your goals and revisit the best way to achieve them. Recognizing how inflation and changing housing prices could hamper the dreams of some of your beneficiaries could inspire you to change what you leave for their benefit. Knowing when you should update your estate plan can help you leave a more meaningful legacy when you pass.