In a recent episode of the Elder Law Report, attorneys Greg McIntyre and Brenton Begley delved into an intriguing connection between current high-interest rates and estate planning. What do the two have in common? As it turns out, quite a lot.
The Implications of High Interest Rates
For the uninitiated, the correlation between high interest rates and estate planning might seem like a stretch. But as McIntyre and Begley aptly highlighted, how one perceives and reacts to fluctuating interest rates can greatly influence one’s estate planning strategy.
High interest rates often spook people. When these rates rise, many shy away from investments requiring loans due to fears of accumulating debt. As a consequence, they might lean towards conservative investments, like Certificates of Deposit (CDs), which offer relatively stable but lower returns. This mentality is largely fear-driven and can mean missed opportunities in the housing market.
Real Estate in High Interest Environments
During periods of high interest rates, house prices tend to decline. This makes sense. As the cost of borrowing goes up, fewer people are inclined to buy, leading to a decrease in demand and subsequently, lower house prices.
But this is where savvy investors and prospective homeowners can take advantage. As McIntyre explained, purchasing property when prices are low, and then refinancing once interest rates drop, can yield significant benefits. You buy low, and when interest rates fall, you benefit from increased property values and lower mortgage payments.
Additionally, the current situation is unique. Housing prices are inflating, but not due to demand. Rather, the devaluation of the dollar and overarching economic forces are driving these increases. Understanding this can be crucial for future planning.
Estate Planning in Light of Market Changes
While fluctuations in the housing market and interest rates are inevitable, they present both challenges and opportunities for estate planning. McIntyre and Begley emphasized the need for adequate protection of real estate assets.
Tools like the ladybird deed, which ensures homeowners retain control over their property during their lifetime and can seamlessly transfer it upon death, can be invaluable. Trusts, too, are powerful instruments. They can protect properties from undue taxation, potential Medicaid liens, and more.
The duo’s message was clear: estate planning is not just about preparing for the end but about maximizing benefits during one’s lifetime and ensuring hard-earned assets are protected and passed on effectively.
In Conclusion
High interest rates, while daunting for some, can be a boon for those well-prepared and advised. Whether you’re a homeowner, investor, or someone looking to safeguard their assets, understanding the broader economic context and having a strategic estate plan in place is essential.
Ready to discuss your estate planning strategy in the current economic climate? Schedule a free consultation with the experts, Greg McIntyre and Brenton Begley. Call 1-888-999-6600 or book online at mcelderlaw.com/scheduling.
Estate Planning & Elder Law Attorney
