Will Inflation Have an Impact on Your Estate Plan?

Inflation can add some twists and turns to your estate plan by increasing asset values and living costs. There are strategic moves to make if inflation is a concern, says a recent article, “4 Ways Inflation Can Change Your Estate Planning” from MSN. If you don’t already have an estate plan, now is the time to create one to protect your legacy.

If one of your estate plan goals is to make generous bequests to help loved ones, the amount you had once intended for them might not be enough. Start by checking how much inflation has eroded your bequest and if you can, adjust the amount based on current costs.

Another way to overcome inflation in bequests is to add assets to the estate that grow over time. These may include index funds or real estate property. Talk with your estate planning attorney about what kinds of assets you currently own and which could work best for inheritances.

While inflation pushing up real estate is good news for property owners, it can raise your estate’s total value. If the threshold for federal estate tax exemption changes, which is yet a big unknown, your heirs may end up with a tax burden instead of a windfall.

This can be addressed by moving assets to loved ones while you’re still living, which could keep your estate under certain tax thresholds. Irrevocable trusts, including a Spousal Lifetime Access Trust or a Grantor Trust, can also be used to move appreciating assets out of your estate. This works to lower potential estate taxes. An experienced estate planning attorney can help determine how your estate is best structured to minimize taxes on a federal and state level.

Increasing healthcare costs are taking a big chunk out of everyone’s pockets, as is the cost of long-term care. If your plan is to pay for a loved one’s medical costs or pay for your own long-term care, you want to protect your funds.

Long-term care insurance policies are costly. However, coverage could prevent your heirs from having to pay for those costs for you. Most insurance companies offer LTC plans as part of a hybrid life insurance plan, making coverage possible. If you expect to apply to Medicaid at some point for yourself or a loved one, this is something to plan for well before you need it. Medicaid has a five-year look-back period, and any wealth transfers made within that time will make you ineligible for coverage.

You should also be sure your estate plan is up to date. If you don’t already have healthcare powers of attorney and living wills set up in advance, meet with an experienced estate planning attorney.

Reference: MSN (April 12, 2025) “4 Ways Inflation Can Change Your Estate Planning”

Will Social Security Get a Raise in 2022?

The COLA increase in Social Security is welcomed by seniors depending upon their benefits but the timing varies, says the article “Social Security Benefits Get a 5.9% Raise This Year–Here’s When You Should See That Extra Money” from the Lincoln Journal Star. Here’s what you can expect.

The first benefit check or automatic deposit should arrive with the 5.9% COLA. However, the timing depends upon your date of birth. If your birthday falls between the first and the 10^th of the month, those benefits should arrive on the second Wednesday of the month, so by January 12, you’ve should have received your first Social Security benefit with the COLA.

What if your birthday is between the 11^th and 20^th of the month? Benefits should arrive by the third Wednesday of the month. That’s a raise on January 19.

And if your birthday is late in the month, between the 21^st and 31^st, expect your benefits on the fourth Wednesday of the month—that would be January 26.

A caveat—if you’re collecting Social Security but have not yet enrolled in Medicare, then you’ll see a monthly increase of 5.9%. However, if you’ve enrolled in Medicare Part B and pay premiums directly from your benefits, your increase will be less. This is the push me—pull you of Social Security COLAs.

Medicare Part B premiums have increased, from $148.50 in 2021 to $171.10 in 2022, a total increase of $21.60. So, while you may have hoped for a true 5.9% increase, subtract the COLA from your premium hike to see what monthly benefit you’ll really get.

The annual deductible for all Medicare Part B beneficiaries is $233 in 2022. That’s a $30 increase from the $203 annual deductible in 2021.

Yes, this is the biggest COLA increase in a long time, as we have been in a low inflation environment for a very long time. If possible, it would be wise to take your COLA increase and set it aside to create or enhance a financial cushion. However, when living costs for everything from food to gas keep going up, it’s simply not possible for most people to save.

The reason this year’s COLA was so large is because of the high inflation rates from the third quarter of 2021. If inflation had been less, so would have been the increase. We don’t know what the future of Social Security will be, or what future COLAs will be. However, if at all possible, building in a little security of your own is the best recommendation.

Reference: Lincoln Journal Star (Jan. 7, 2022) “Social Security Benefits Get a 5.9% Raise This Year–Here’s When You Should See That Extra Money”

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