New York Estate Planning & Elder Law Blog
The 2020s have been filled with tension. First, in 2020, the Covid-19 pandemic emerged. Then, race tensions hit an all-time high following the death of George Floyd and several others. Now, the invasion of Ukraine has left many people in more difficult situations than ever before. All of these events are enough to make even the calmest person uneasy.
The most seasoned estate planning professionals are used to addressing two major sources of uneasiness with clients: death and taxation. Planning for these certain events will help to reduce the uneasiness that a person feels. While it’s impossible to control the future and the state of the world, people can engage in thorough estate planning and be fully prepared for any complications that might happen and impact their estate plans.
Estate planning frequently attempts to pass or minimize risk. Some of the most helpful risk-avoiding or risk-shifting techniques that people utilize in an estate planning environment include:
- Transferring risk to another party. For example, by obtaining life insurance.
- Avoiding the risk. This might involve placing assets in a trust to protect them from creditors.
- Reducing the negative impact or likelihood of the risk.
- Accepting some or all potential consequences of a risk.
Utilizing an Adequate Planning Process
Regardless of the technique that you take to shift or avoid risk, estate planning often requires a nuanced planning process. Some of the steps that you should follow include:
- Identify and classify the various threats including taxes, death, and disability that could end up harming your financial status
- Assess your vulnerability of significant assets to these specific threats
- Decide on the level of risk that you face from specific attacks on certain types of assets
- Distinguish the techniques that you can take to reduce risks
- Prioritize risk reduction measures in your estate planning
Your estate plan can reduce the risk of loss due to current and future uncertainties while also affording you the chance to fulfill your long-term goals and manage risk. The best way to achieve these goals is to utilize scenario planning while estate planning. Scenario planning is a method of forecasting that can greatly reduce the uncertainties that a crisis causes to something you can handle without hiding the risks. Scenario planning also places you in control by considering what could happen and understanding what is necessary to cope with anticipated risks. Dealing with a crisis means avoiding financial harm as well as increasing the opportunities present. To take both of these steps, a person needs to manage results that are capable of being anticipated as well as those you cannot predict. Many people discover that scenario planning is an excellent way to forecast in a way that lets you create an estate plan that minimizes risks while maximizing the potential for opportunities.