In This Edition:
- Estate Planning During Periods of Inflation and Market Volatility
- Get to Know Attorney Bryce Kaufman
- Recipe Spotlight
Estate Planning During Periods of Inflation and Market Volatility
By Bryce Kaufman
Like it or not, inflation is here. With higher prices and interest rates, as well as a volatile market, such unknowns may create challenges for estate planning. However, a properly constructed portfolio and estate plan anticipates future uncertainties and can help mitigate risk. This means not only understanding inflation’s immediate and long-term impact but also proven strategies for combating inflation’s effects.
Inflationary Impact on Estate Plans
Many people create estate plans for the express purpose of providing for others. We want to ensure that our spouse, children, grandchildren, and loved ones are provided for while minimizing tax liability. For this reason, it is important to pay close attention to increasing inflation because it can directly affect the money you leave behind.
The problem is that, today, America is experiencing a rapid rise in price at an annual inflation rate not seen since the 1980s. In its simplest terms, inflation means that the value of a dollar today is worth more than it will be tomorrow. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.
To illustrate broadly how this affects an estate plan, let’s say you have $500,000 that you wish to leave behind to your young grandchild for the purpose of buying a home. While this might seem like enough money to purchase a home today, inflation may continue impacting the market in such a way that by the time it is inherited, spending power could be far less with $500,000 and no longer enough to purchase a home.
Strategies to Combat Inflation
By understanding how inflation affects our finances, we can begin to guard against its impact. One good practice is to ask your financial planner to conduct a stress test on your finances. If the higher-inflation assumption in your plan is too low compared to reality, it could result in a significant reduction of income or possibly the depletion of your savings. Knowledge is power and having this knowledge puts you in the driver’s seat.
Another useful strategy is diversification. Diversification may reduce your risk exposure by ensuring that investments are spread out over various asset classes. To diversify stocks and bonds, for example, is to undergo an effective risk management strategy that enables you to invest in various financial assets, which can play a crucial role in reducing the risk of damaging loss. Talk with your financial planner about diversification because whether it is your home, retirement account, investment account, or other entities, different assets may be treated differently from an estate tax perspective.
Finally, know the net value of your estate. While inflation is driving up the price of almost everything, it is also likely driving up your net worth. Whether you have an estate plan in place or not, assessing your total estate value is essential for tax planning purposes. Currently, the federal government taxes any estate above $12.06 million, indexed every year for inflation. (It is important to note that the current federal exemption is set to expire in 2025.) Additionally, there is a $1 million exemption in Oregon, which is not indexed for inflation.
The Value of Estate Planning
With inflation rates rising, now is a great time to meet with a knowledgeable and trusted estate planning attorney to review your goals and adjust your plans. At Myatt and Bell, P.C., we work with you to meet your goals. While no one knows what tomorrow holds and where the economy will be, a properly designed estate plan can help protect against uncertainty.
Bryce Kaufman – Attorney
What are you currently reading?
I have been on a science fiction binge lately and have been going back and forth between the Dune series by Frank Herbert and the Foundation series by Isaac Asimov. Reading both is fractionating as Dune was written as an opposing vision of the future to Isaac Asimov’s Foundation series. Highly recommend both and the recent Dune movie directed by Denis Villeneuve.
What do you like to do just for fun?
I am a native Oregonian and enjoy all things outdoor. Skiing, running, biking, hiking, or just gardening, if it is outside, I love doing it. And if it is raining, I wear a rain jacket, or think about what I should do once the weather gets better.
Most memorable place you have vacationed?
As a food lover both India and Spain are very memorable places. Choosing one as a memorable place I will go with India. I have only been to northern India and still need to visit the south. Nevertheless, India is a fantastic country to visit with incredible sights, history, and fantastic food. While I really enjoy traveling to Europe, Central and South America, there really is nothing like India.
Bryce’s Cast-Iron Pizza*
* A Bon Appetit recipe, but with a sweet twist!
- Store-bought or homemade pizza dough (room temperature)
- 5 tbsp. extra-virgin olive oil, divided
- 8 oz. Italian sausage, casings removed
- Kosher salt
- ⅓ cup prepared marinara
- ¾ cup coarsely grated low-moisture mozzarella
- ½ small fennel bulb, very thinly sliced
- 3 garlic cloves, very thinly sliced
- Crushed red pepper flakes (optional), hot honey (optional), and torn basil leaves (for serving)
- Place a rack in top-most position of oven; preheat to 475°. Place dough on a work surface; drizzle with 1 tbsp. oil, turning to coat. Stretch out to a 12″ round (or diameter of pan being used) and cover loosely with plastic wrap.
- Heat 1 tbsp. oil in a large cast-iron skillet over medium. Cook sausage, breaking up into small pieces with a wooden spoon, until browned in spots and cooked though, 5-8 minutes. Transfer sausage to a small bowl but do not drain and leave fat in pan.
- Remove skillet from heat and carefully lay dough inside (use spoon to help you extend dough all the way to the edges). Season with salt, then spread marinara over entire surface of dough. Top with mozzarella, then fennel, garlic, and cooked sausage. Drizzle with another 2 Tbsp. oil. Peek underneath the crust-the bottom should be golden brown and crisp from residual heat in the skillet. If it’s not, set over medium-low and cook until crust is golden brown, about 3 minutes.
- Transfer skillet to oven and bake pizza on top rack until crust is golden brown around the edges and cheese is browned in spots and bubbling all over, 10-14 minutes. Let cool 5 minutes, then top with red pepper flakes, hot honey, and basil. Sprinkle with more salt and drizzle with remaining 1 Tbsp. oil.
Estate Planning = Peace of Mind
Have you found yourself making excuses for why not to get your estate in order? Maybe you’re convinced that you really don’t need estate planning. If you have assets and loved ones, you need an estate plan. Having an estate plan that is right for you ensures your loved ones are taken care of and that the transition is as easy as possible.
Attend one of our complimentary estate planning webinars and see for yourself. Having your estate plan prepared and understanding the why’s behind the importance of estate planning can bring you the peace of mind you have been needing. Join us at our next Estate Planning Informational Webinar by clicking here.
From Our Clients
“My wife and I set up our Living Trust through Myatt and Bell originally in 2002 and they did a great job! We did an update through them recently and were again very happy with their work! I am happy to recommend their services to anyone who needs this type of work done.” – Jeffrey
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