From GoBankingRates.com — By Chris Ozarowski —
Inflation can add new challenges to estate planning. It can increase asset values, legal fees and everyday living costs. That means you may need to revise your estate plan, or set one up sooner than you expected, to protect the legacy you want to leave.
Here are several ways inflation might reshape your planning and concrete ways you can respond.
Eroded purchasing power for bequests
A key goal for many people is to leave enough for loved ones to handle future expenses. If prices rise sharply, the same amount of money will buy less of what your heirs need. A sum you once considered adequate might not stretch as far due to increased costs for housing, groceries, healthcare and more.
If you’ve already planned to leave fixed sums of money to your beneficiaries, check whether inflation has made them less effective. Adjust the amounts based on current living expenses.
A good way to counteract inflation when it comes to bequests is to add assets to your estate that may grow over time, such as index funds or real estate. This way, your assets are more likely to keep pace with or outgrow inflation. Talk to a trusted financial professional to make sure your investment choices match your tolerance for risk.
Higher Costs for Legal and Advisory Services
Estate planning usually involves professionals, including attorneys, accountants and possibly appraisers. Inflation can raise their fees. That means you might pay more now to create or update essential documents such as wills, powers of attorney or various trusts.
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