Pandemic-Era Estate Planning Trends

Written By: Emily Boothroyd, Wealth Manager

The uncertainty prompted by the COVID-19 pandemic has encouraged individuals to reframe their perspective on many aspects of life and reach a level of self-reflection that they may have never considered before. This is true to mental and physical health, as well as financial health. In all aspects of life, people are digging a little deeper into themselves, their relationships and their finances. One area that is rising to the surface is estate planning.

There are many trends that have emerged over the past year that have contributed to changes in estate planning, some of which might be unexpected. Here are a few:

Revisiting and updating old plans.

Initially, when individuals revisit their estate plan they are quick to realize there are a lot of details that are out of date. For example, your children who are now in their late twenties no longer need a set guardian in place in case something happens to you. Changes like this are a bit more straightforward and allow you to focus on the aspects of your estate plan that need expanding. It is essential to use this time to dust off those outdated estate plans and get started on something relevant and substantial.

Planning to protect the next generation.

The pandemic has cast a light on family dynamics for everyone. Families are back under one roof, potentially for the first time in years. On top of that, emotional turmoil and stress from safety fears and financial strain from employment changes are making the situation even more difficult to navigate. Mental health has come to the forefront and more families are having open and candid discussions on the topic. This impacts how parents approach their estate plan and how they structure passing wealth to the next generation.

When you see your child’s level of stress under a microscope this way, it gives you a new perspective. The last thing anyone wants to do is saddle their adult children and families with any additional stress during a time of grief so making sure there are clear instructions, updated records, and no surprises along the way has been an increased focus as clients make updates to their plans. This ensures that their children are best-positioned for the future, and engage in personalized in-depth planning surrounding these aspects of family life.

A changing approach to estate planning.

In addition to the ongoing pandemic, 2021 ushered in a new era of estate planning due to the tax reform of the Biden administration, making it more costly to pass assets to the next generation. Those who are planning for this feel a sense of urgency to make their gifts now before the reform takes effect. People are turning to alternative options such as utilizing an irrevocable trust or lifetime access trust in their plan, and more popularly, turning to life insurance. Life insurance in this instance, can act as a wealth replacement vehicle and pay your children back for the taxes that they could end up paying on gifts that you pass down to them. The utilization of life insurance in this aspect is an emerging trend that is quickly gaining popularity as we enter the new era.

When you sort through the many trends in estate planning that have emerged in the past year, it really comes down to one thing: family. The aspects that impact your estate plan are endless, but the most important consideration should be doing what is best for the people you care about. If anything positive has come out of the COVID-19 pandemic, it is that realization.

With the newly found emphasis on the mental and emotional aspects of life, individuals are becoming more comfortable discussing the personal details of their lives with others. This goes for financial planning as well. When you take that initial step and begin dusting off that old estate plan, be sure to consider the above. Creating a plan that is personal to your family, in every sense, is a goal that Merit advisors strive for daily. These trends may have emerged within the past year, but we plan to maintain this holistic viewpoint for the rest of our careers. Contact our team to learn how to get started!