When markets get turbulent, most people think about their investment portfolio. They check their balances, wonder whether to rebalance, and consider whether their allocation still makes sense. What fewer people think about is their estate plan.
That is a missed opportunity. Because volatile markets do not just affect what your portfolio is worth today. They affect how effectively your wealth transfers to the people and causes you care about, how protected your family is if something happens to you during a period of disruption, and whether the planning structures you put in place years ago still reflect your current wishes and current law.
The connection between market volatility and estate planning is real, specific, and in several cases genuinely time-sensitive. This article explains why, and what a review of your estate plan should actually cover when the financial environment is uncertain.
Volatility Creates Estate Planning Opportunities, Not Just Risks
The conventional framing of estate planning during uncertain times focuses on protection: making sure your documents are in order, your beneficiaries are current, and your family would be taken care of if something happened to you. That framing is correct, but incomplete.
Declining asset values also create legitimate planning opportunities that do not exist when markets are high. Several of the most effective estate and wealth transfer strategies become more advantageous precisely because valuations are lower.
Gifting Appreciated or Depressed Assets
The annual federal gift tax exclusion allows you to give up to $19,000 per person per year in 2025 ($38,000 for married couples giving jointly) without using any of your lifetime exemption. When asset values are depressed, the same number of shares, units, or interests transfers at a lower taxable value, meaning more economic value can move to the next generation within the same exclusion limits.
For business owners, this is particularly relevant. A partial interest in a business that is worth less today than it was two years ago transfers at today's lower value, not the prior high. If the business recovers, that appreciation occurs inside the recipient's estate, not yours.
Intra-Family Loans at Low AFR Rates
The IRS publishes Applicable Federal Rate (AFR) rates monthly, which set the minimum interest rate for loans between family members to avoid gift tax treatment. When rates are relatively low, intra-family loans can be an efficient way to transfer wealth. A family member borrows at the AFR, invests the funds, and any return above the AFR passes to them free of gift or estate tax. This strategy is most powerful when the borrower can invest in assets expected to outperform the loan rate over time.
Grantor Retained Annuity Trusts (GRATs)
A GRAT is an estate planning trust in which you transfer assets, receive annuity payments back over a fixed term, and pass any appreciation above the IRS hurdle rate (the Section 7520 rate) to heirs free of gift tax. When asset values are low and the hurdle rate is moderate, the potential for assets to appreciate beyond the threshold is higher, making GRATs a more compelling planning tool in volatile environments than in stable, high-valuation ones.
If the assets recover in value during the GRAT term, the appreciation passes to heirs at no additional gift tax cost. If they do not, the assets simply revert to the grantor with no net harm.
Roth Conversions and Their Estate Planning Dimension
Lower portfolio values also create an argument for Roth conversions. When you convert a depressed IRA balance to Roth, you pay tax on a smaller amount. If the account recovers in value after conversion, that growth occurs tax-free and, importantly, without the required minimum distributions that apply to traditional IRAs. Roth IRAs passed to heirs are inherited free of income tax, which can be a meaningful advantage in multigenerational planning. See Leaving a Tax-Free Legacy: How Roth Conversions Benefit Your Heirs for how this works across generations, and Is a Roth Conversion Right for You? for the personal tax analysis.
What Volatility Reminds Us About Protection
Beyond the planning opportunities, market volatility serves as a useful, if uncomfortable, reminder of a set of planning basics that most people know they should address and that many have not.
Your Documents May Not Reflect Your Current Life
Estate planning documents are not self-updating. A will drafted when your children were minors may be completely appropriate for your current situation, or it may name outdated guardians, reference assets that no longer exist, and fail to account for assets acquired in the intervening years. A power of attorney naming someone who is no longer part of your life, or who has predeceased you, is a liability rather than a protection.
The general guidance is to review estate documents every three to five years and after any significant life event: marriage, divorce, birth, death, business sale, or major change in assets. If your review is overdue, the current environment is a reasonable prompt to schedule it. See The Legacy Planning Checklist: 7 Documents You Can't Ignore for the full inventory of what a complete plan covers.
Beneficiary Designations Override Your Will
This is one of the most consequential and most overlooked facts in estate planning. The beneficiary designations on your retirement accounts, life insurance policies, annuities, and transfer-on-death accounts supersede whatever your will says. If your will leaves everything to your current spouse but your IRA still names a former spouse as beneficiary, your former spouse receives the IRA. The will does not override it.
Volatile markets often prompt people to log into their financial accounts to check balances. While you are there, check the beneficiary designations. Confirm they reflect your current intentions. This takes minutes and can prevent outcomes that take years and thousands of dollars to unsuccessfully contest.
Powers of Attorney and Healthcare Directives
If you were to become incapacitated tomorrow, could the people you trust step in to manage your financial affairs and make healthcare decisions on your behalf, without a court process? A durable power of attorney and a healthcare directive are the documents that make this possible. Without them, your family may need to petition a court for guardianship or conservatorship, a process that is expensive, slow, and public.
These documents do not require significant wealth to matter. Anyone with a bank account, a mortgage, or a preference about their own medical care has something to protect.
Life Insurance in Uncertain Times
If your estate plan depends on life insurance to fund a trust, replace income, provide liquidity to pay estate taxes, or equalize inheritances between heirs, review that coverage now. Confirm the policy is still in force, the beneficiary designations are current, and the death benefit still reflects what your plan requires. A policy that has lapsed quietly, or one whose death benefit has eroded through policy loans, can leave a gap in your plan that is only discovered at the worst possible moment.
The Estate Tax Environment: What to Know Right Now
Estate planning does not happen in a policy vacuum. The federal estate and gift tax exemption, which determines how much you can transfer to heirs free of federal estate tax, has been at historically elevated levels since the Tax Cuts and Jobs Act of 2017. The current exemption is approximately $13.99 million per individual (2025), or nearly $28 million for a married couple.
However, these elevated exemptions are scheduled to sunset at the end of 2025 under current law, reverting to roughly half their current levels (adjusted for inflation) beginning in 2026, unless Congress acts to extend or modify them. The One Big Beautiful Bill Act, currently under legislative consideration, includes provisions that would extend and potentially increase these exemptions, but legislative outcomes are uncertain.
What this means practically: if your estate may be subject to federal estate taxes at a lower exemption level, planning that captures today's higher exemption is worth doing now rather than waiting to see what Congress decides. Gifts made using the current exemption are protected even if the exemption later decreases, according to IRS regulations issued in 2019.
This is not a reason to panic or restructure everything. It is a reason to have an informed conversation with your financial advisor and estate attorney about whether action in the current window makes sense for your situation.
Estate Planning Conversations That Volatile Times Accelerate
In our experience, certain estate planning conversations that clients have been delaying for years tend to become urgent when markets are turbulent. Not because the urgency is new, but because instability has a way of making the abstract feel real.
Business Succession
For business owners, uncertainty in the broader economy often surfaces questions about what happens to the business if something happens to them. Who runs it? Who owns it? Is there a buy-sell agreement in place, and is it funded? Is the valuation current? A business with no succession plan is a significant risk to both the business itself and to the family members who depend on it. For a guide to building a business exit strategy that accounts for personal financial goals and legacy, see The Entrepreneur's Exit Plan: How to Retire from Your Business on Your Terms.
Blended Families
Estate planning for blended families is complex under any circumstances. Competing interests, multiple sets of children, stepparent dynamics, and the question of who gets what from which marriage's assets require careful structuring to protect everyone's interests fairly. Volatile markets can intensify these dynamics, particularly when asset values are shifting and family members are paying closer attention. See Blended Family Legacy Planning: How to Protect Everyone's Interests for a detailed look at the specific planning tools and conversations that help.
Digital Assets
Many people have meaningful financial value in digital accounts, cryptocurrency holdings, and online business assets that are not addressed in their estate documents at all. If no one knows where to find these assets or has legal authority to access them, they may be lost entirely. For a guide to incorporating digital assets into a complete legacy plan, see The Digital Legacy Checklist: Protecting Your Online Life After You're Gone.
Charitable Giving
For clients with charitable intent, volatile markets often prompt the question of whether to give now or later. Giving appreciated securities that have recovered from a recent low, donating directly from an IRA through a Qualified Charitable Distribution (QCD) for those over 70½, or establishing a donor-advised fund during a high-income year are all strategies with specific timing considerations. The right approach depends on your tax situation, your giving goals, and the assets you hold.
Will vs. Trust: Does Your Current Structure Still Fit?
Many people have a will but no trust, or a trust that was established years ago and has not been reviewed since. The question of which structure is appropriate for your situation is not one with a universal answer, but it is worth revisiting when your financial picture, family structure, or state of residence has changed. See Why a Trust May Be Smarter Than a Will for Your Family's Future for a practical breakdown of when a trust adds value beyond what a will can accomplish.
For most people, the key questions are whether probate avoidance is a priority, whether there are minor children or beneficiaries who need managed distributions rather than outright inheritance, whether property in multiple states creates probate complexity, and whether privacy in the transfer of assets is important. Trusts are not only for the very wealthy. They are useful tools for anyone whose distribution goals cannot be fully accomplished through a simple will.
Frequently Asked Questions
Q1: Does market volatility actually affect what I can give to my heirs?
Yes, in meaningful ways. Lower asset values mean you can transfer more economic value within the same gift tax exclusion limits. A depressed asset transferred today moves the future appreciation out of your estate. Several advanced planning strategies, including GRATs and certain trust structures, also perform better when interest rates and asset values are at specific levels. Volatile markets are not only a risk to manage. They are a planning environment with specific opportunities that do not exist when everything is at peak value.
Q2: How often should I review my estate plan?
The standard guidance is every three to five years, and immediately following any significant life event: marriage, divorce, birth of a child or grandchild, death of a named beneficiary or executor, major change in assets, business sale, relocation to a different state, or significant change in tax law. The current combination of legislative uncertainty around estate tax exemptions and broader economic volatility makes this a particularly good moment to schedule a review if you are overdue.
Q3: What is the most common estate planning mistake people make during uncertain times?
Doing nothing. The uncertainty of volatile markets can feel like a reason to wait: wait for the market to settle, wait for Congress to clarify the tax rules, wait until things feel more predictable. But estate planning is most valuable precisely when the future is unclear. The documents that protect your family, the beneficiary designations that direct your assets, and the powers of attorney that authorize someone to act on your behalf are not less necessary when the world is uncertain. They are more necessary.
Q4: I have a will already. Is that enough?
A will is the foundation of an estate plan, but it is rarely sufficient on its own for anyone with meaningful assets, a blended family, a business interest, minor children, or specific legacy goals. A will goes through probate, is a public document, and cannot manage assets for beneficiaries who are not ready to receive them outright. Beneficiary designations, powers of attorney, healthcare directives, and potentially trust structures round out a complete plan. See The Legacy Planning Checklist: 7 Documents You Can't Ignore for the full picture of what belongs in a complete estate plan.
Q5: Should I be doing a Roth conversion now as part of my estate planning?
If your IRA values are lower than they were a year or two ago, converting now means paying tax on a smaller balance. Any recovery in value happens inside the Roth account, tax-free, and Roth IRAs do not have required minimum distributions during your lifetime. When passed to heirs, Roth IRAs are inherited income-tax-free, which can be a meaningful legacy advantage. Whether a conversion makes sense for your specific tax situation is a separate question that depends on your current bracket, projected future income, and IRMAA considerations. See Is a Roth Conversion Right for You? for the full analysis.
Q6: What should I do right now if I am worried about my estate plan?
Start with a review of your beneficiary designations across all accounts and insurance policies. That is the single highest-impact, lowest-effort action available to most people, and it does not require an attorney. From there, confirm that your will, trust documents (if any), power of attorney, and healthcare directive are current, reflect your actual wishes, and name people who are still in your life and willing to serve. If anything is missing or outdated, schedule a conversation with your financial advisor and estate attorney. Our Legacy Planning service is designed to coordinate exactly this kind of review alongside the rest of your financial plan.
Conclusion
Markets will do what markets do. They will rise, decline, recover, and surprise. What you can control is whether your estate plan is built to protect your family and reflect your intentions regardless of what the financial environment looks like when it is needed.
Volatile periods are uncomfortable. They are also clarifying. The questions that instability raises, about who would manage things if you could not, whether your assets would actually reach the people you intend, whether there are planning opportunities available right now that will not be available indefinitely, are worth sitting with rather than deferring until things feel more settled.
If you have been meaning to review your estate plan and have not yet done so, this is the moment. At MJT & Associates, we work alongside your estate attorney and CPA to ensure your legacy plan is coordinated with your investment strategy, tax planning, and retirement income goals. For a broader view of how all of these pieces fit together, see Achieve Financial Wellness: The Benefits of a Holistic Financial Planner.
