What Discretionary Income Has to Do With Your Estate Plan
By: Barry E. Haimo, Esq.
August 5, 2021
When it comes to estate planning, most people tend to think of the items in that plan as static. Accounts that have set amounts of money — or at least that you don’t really touch in your daily life. Property whose value may go up or down, but not through any actions that you take.
Even the nature of an estate plan is one that screams permanence. You create documents such as a will, trust, or Power of Attorney that are designed to stand the test of time — after all, their very purpose is to outlive you!
The truth, however, is that you affect the value of your estate plan every single day of your life, and one of the biggest ways is through discretionary income.
What Is Discretionary Income?
Discretionary income is, quite simply, the amount of money you or your household have left over after you have already paid for the necessities in your life, such as expenses related to housing, clothing, transportation, food, and utilities.
It’s what you use when you go out for a nice dinner. Or book a vacation. Or splurge on the latest gadgets on Amazon. Or give your kids money to go out with their friends to eat and see a movie.
But it’s also, potentially, the money that you might decide to save or invest for the future. Discretionary income can be retirement savings. It can go into college funds for your kids. On a shorter term, it can be used to save up until you have money for that vacation mentioned earlier.
How you use it is, quite literally, at your discretion.
How Discretionary Income Relates to Estate Planning
You can probably already see where this is going.
Discretionary income has quite a lot of influence on estate planning. Not many people believe they have an estate that is large enough to have an estate plan, but if you are smart about the use of your discretionary income, it is often possible to save a little each month. Over time, this can help you to build up a fairly significant nest egg if you are consistent and diligent.
Of course, this isn’t easy to do on your own. And once you save a significant amount of money, it’s not always easy to know how to best utilize it so that it will be there for your beneficiaries after you are gone.
This is where working with an experienced estate planning attorney can help. He or she will assist you in making the best decisions regarding your investments and savings so that you can ensure that both you and your beneficiaries are taken care of in the future.
No matter the size of your estate, estate planning is important – and it’s something anyone can do. Make sure to explore your options with a professional to ensure you’re making the best use of your assets.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
YOU ARE NOT OUR CLIENT UNLESS WE EXECUTE A WRITTEN AGREEMENT TO THAT EFFECT. MOREOVER, THE INFORMATION CONTAINED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. EACH SITUATION IS HIGHLY FACT SPECIFIC AND EXCEPTIONS OFTEN EXIST TO GENERAL RULES. DO NOT RELY ON THIS INFORMATION, AS A CONSULTATION TO UNDERSTAND THE FACTS AND THE CLIENT’S NEEDS AND GOALS IS NECESSARY. ULTIMATELY WE MUST BE RETAINED TO PROVIDE LEGAL ADVICE AND REPRESENTATION. THIS INFORMATION IS PROVIDED AS A COURTESY AND, ACCORDINGLY, DOES NOT CONSTITUTE LEGAL ADVICE.