Why the Weak Economy Might Mean It Is Time to Update Your Estate Plan

Why the Weak Economy Might Mean It Is Time to Update Your Estate PlanOur Santa Fe, NM Estate Planning Attorneys have previously addressed the importance of periodically reviewing an estate plan to ensure that there have not been relevant changes in the law or one’s situation that merit changes to an individual’s estate plan.  The types of events that should routinely trigger an evaluation of an estate plan include marriage, divorce, birth or adoption of a child, retirement, and similar major family changes. However, sometimes there are factors unrelated to changes in an individual’s family or personal financial situation or existing law that justify such an update.  One key event which merits revisiting one’s estate plan that is relevant for many people is the impact of a poor economy.  Our Santa Fe Estate Planning Law Firm has provided some examples of how the current state of the economy may make it prudent to revisit one’s estate plan.

Buyout Provisions for Closely Held Businesses:

Given that the recession followed by an extremely slow recovery may have adversely impacted the value of your business, it may be appropriate to revise the business buyout provisions to reflect the diminished value of the company.  If the business buyout provision was prepared when the company was worth $5 million, it can create serious problems if a partner leaves the business when it is worth only $3 million.  The partner leaving may need to be bought out based on the business being valued at the higher amount.


When an individual decides how to distribute assets in his or her estate through a will, the decision is usually based in part on consideration of the relative value of the assets.  In a bad economy, some and perhaps most assets will decline in value but not necessarily to the same extent.  Further, certain investments may actually increase in value during a weak economy.  Because these changes in the value of your assets may impact the proportion of your estate given to beneficiaries based on the specific assets left to each, it may be appropriate to revise your will to reflect these different valuations.

Trusts with Milestones or Incentives:

Many people construct a trust so that distributions to their kids are based in some way on the kids’ earnings, such as matching their earnings from employment or investment.  These types of provisions are designed to motivate one’s kids to be industrious in pursuing their own financial success rather than simply relying on an inheritance that can be quickly depleted.  With 91 million Americans out of work, prolonged unemployment by one’s kids may reflect the state of the economy rather than any lack of effort.  If the incentive provisions in your trust are not artfully drafted, this can prevent your kids from receiving financial support during a time of critical need.

Estate Planning for the Sandwich Generation

The above information is provided to illustrate general principles of law and should not be interpreted as a specific legal opinion on an individual case. You should contact experienced legal counsel to get specific legal advice that is based upon your specific circumstances.

If you have questions about estate planning, our Santa Fe, NM Estate Planning Attorneys at Life Leaf Legal Group, PC offer a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your specific situation.  Call us today to schedule your free consultation at (505) 856-3591 to learn about your rights and options.

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