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Arizona residents set up their estate plans with the hope of being able to take care of their families for years to come. However, many estate plans are impacted by things beyond the person’s control – such as inflation.
Over time, the cost of living will go up due to inflation. As the cost of living goes up, it’s not uncommon for the value of certain assets to go down. This can be a problem as you’re setting up your estate plan.
Valuing Your Assets
It’s important to consider the value of your assets, both when you’re creating your estate plan and in the years after. Some assets – such as cars and other property – may not have the same financial value years down the line.
For example, stocks may lose value quickly compared to other investments like retirement accounts or bonds. The reverse is also true – stocks can grow quicker than a bond or other investment account, but it is a calculated risk.
It’s also important to consider things like property tax or estate taxes when setting up your estate plan. While certain assets will gain value, it’s also possible they’ll cost your family just as much in taxes.
Making Your Estate Plan Inflation Proof
The best way to plan for inflation in your estate plan is to diversify your assets. Having multiple types of assets and investments to pass down to your family can increase the chance they’ll be able to benefit.
Trusts can be a great way to protect your beneficiaries from getting slammed with estate taxes, saving them money. You also might want to consider life insurance policies, which your beneficiaries can cash out to provide immediate relief.
It can be hard to plan around so many unknowns as you’re making your estate plan. Frequently checking in with the actual value of your assets and making updates to your estate plan as necessary can help ensure you’re able to get the most out of your plan.
