Market downturns aren’t just stressful for your portfolio—they can also ripple into your estate plan. While many people think of estate planning as something you “set and forget,” a dip in the market is a good reminder that your plan should evolve alongside your financial reality.
If you’ve seen your asset values drop, here’s how that might affect your estate—and what steps you can take to stay on track.
Your Gifting Strategy May Need a Recalibration
If you’ve been gifting assets to children, grandchildren, or trusts as part of your estate plan, a down market can actually open up a window of opportunity.
When asset values are depressed:
- You use less of your lifetime gift and estate tax exemption, which is $13.99 million per person in 2025.
- You can transfer more future growth to your heirs tax-free, assuming the market rebounds.
This is especially useful when gifting closely held business interests, stocks, or real estate—anything that’s likely to appreciate again over time.
What to consider:
Now may be a good time to increase your annual exclusion gifts, make larger lifetime transfers, or fund a trust while values are low.
On the other hand, if your portfolio shrinks, you may need to reassess whether you can afford your previous gifting plan. Gifting is like putting on your mask in an airplane. Make sure you have enough for your own needs before giving money away to your heirs.
Trusts Based on Dollar Amounts Might Need Updating
Some estate plans include formula-based funding clauses, such as “transfer the amount that equals my remaining estate tax exemption to Trust A.” But if your assets have dropped significantly in value, that formula may no longer achieve what you intended.
You might unintentionally:
– Underfund a trust meant to support a surviving spouse or child
– Create an imbalance between heirs
– Trigger unwanted tax consequences
What to consider: Review the language in your trusts, especially those tied to specific dollar amounts or percentage splits. Make sure your plan still reflects your wishes given your current asset values.
Asset Values in Your Plan May No Longer Reflect Reality
If you’ve named specific dollar amounts or assets in your will or trust—for example, “$50,000 to each grandchild,” or “I leave the beach house to my daughter”—the market’s impact on asset values could cause those gifts to become unbalanced or even problematic.
A house that once made up 40% of your estate may now be 70%. A stock portfolio left to one child might now be worth much less than what was left to another.
What to consider: Review your plan with an eye toward balance, fairness, and clarity. Adjust distributions or update asset lists if needed.
You May Be More Concerned About Long-Term Care Expenses
Market declines can make many people re-evaluate their ability to afford long-term care in retirement—especially nursing home or home health care, which in New York can easily exceed $150,000 per year.
If you’re worried about running out of funds, Medicaid planning may be more relevant than ever. Starting early allows you to protect more assets and gives you more options down the road.
What to consider: Time is of the essence in Medicaid planning. Explore Medicaid Asset Protection Trusts (MAPTs), gifting strategies, or other asset-protection tools while you still have flexibility.
Final Thoughts: Your Estate Plan Should Change As Your Finances Do
A solid estate plan is built for the long haul—but that doesn’t mean it should sit untouched. A market downturn may be the right time to revisit key pieces of your plan, make tax-savvy moves, and ensure everything still aligns with your values, goals, and family needs.
Let’s Review Your Plan Together
If the market has changed your financial outlook, we’re here to help you navigate what that means for your estate. From trust updates to tax-saving opportunities, we’ll make sure your plan continues to work for you—no matter what the market is doing.