Estate planning can be a confusing topic, especially when considering it along with financial planning. It can be even more confusing given the current debate over tax cuts and how they will impact the economy if they are enacted. A recent article from MarketWatch.com paints a rather bleak picture of the cost of tax cuts for middle class families, especially when it comes to estate planning in the future. However, understanding how these tax cuts could impact your estate plan is an important first step in navigating the complexities they may bring with them.
Impact of Public Deficits
According to the article, the Congressional Budget Office is projecting increased deficits if we remain on our current course. If we factor in proposed tax cuts, those deficits are predicted to increase even more. When combined with the ever-increasing cost of health care, especially long-term health care at an advanced age, these deficits may make it harder for younger individuals to save for retirement. This is especially true if important social programs, like social security and Medicare, start to experience cuts or even begin to run dry. The increase in public deficits that many analysts predict will accompany the proposed tax cuts are likely to put increased pressure on these important supplemental income programs and the programs in turn are likely to experience significant cuts in addition to already predicted shortfalls
Another article from FinancialPlanning.com points out that even cost of living adjustments in social security and other supplemental income will not be enough to set off the rising costs of health care – especially in the absence of funding for programs like Medicare and Medicaid. In fact, the article notes that the cost of living increase for social security recipients in 2018 will be eaten up by the rising costs of those recipients’ Medicare Part B premiums.
Planning for Your Future
One of the most important things to remember about estate planning and the aspects that factor into it is that there is no “one size fits all” solution. There are many estate planning vehicles that can help you prepare for retirement while still ensuring the integrity of your assets and the estate you wish to leave behind for your heirs. Working with experienced financial planners and coordinating with your experienced estate planning attorney is an important way to help find the comprehensive estate plan that works best for you.
Estate planning has become inextricably intertwined with financial planning and retirement planning. They have many shared aspects and each has many factors that are directly impacted by or have the ability to directly impact the others. With so many options available, it is important to work with an experienced estate planning attorney to make sure you create a comprehensive estate plan that provides for you and your family’s needs. Starting to focus on retirement planning and estate planning early can help you create important financial planning habits that make it easier to navigate an uncertain future whether tax cuts are part of the picture or not.