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You’ve probably heard about the national debt ceiling and its recent extension, but you might wonder what it has to do with your everyday life as a family. While it may seem like a distant matter, the national debt ceiling extension can have a significant impact on your family’s financial well-being and future planning.

So What Exactly is the National Debt Ceiling Extension? 

The national debt ceiling is a legal limit set on the amount of money the government can borrow to finance its operations and meet its financial obligations domestically and around the globe. When the government reaches this limit, it cannot borrow more money unless Congress raises or extends the country’s debt ceiling. If the ceiling isn’t raised and the United States can’t pay back its debts, the country’s global creditworthiness is affected as well as financial security abroad and at home.

Congress raised the national debt ceiling on June 3, 2023, which means the United States will not default on its loans. This is good news, and yet the extension of the debt ceiling can still affect the economy and your family.

Here’s how the national debt ceiling extension can affect the economy, and your family, and what you can do to mitigate the impacts.

Access to Credit and Loans

You likely rely on credit and loans for various purposes, such as buying a home, financing education, or handling unexpected expenses. When the national debt ceiling is extended, it can create uncertainty in the financial markets, leading to higher interest rates and tighter lending conditions. This means that securing affordable credit and loans for major life milestones or managing financial emergencies may become more challenging.

One of the ways you can mitigate this impact could be to consider starting a business or a side hustle, so you can create multiple revenue streams instead of just being reliant on one, and leverage access to business credit, which can be more accessible and less expensive than using personal credit, even in tight lending markets.

Consumer Confidence and Spending Habits

Your family’s financial health may be closely tied to the state of the external economy. When there is uncertainty surrounding the national debt ceiling, coupled with high inflation, it can affect consumer confidence and spending habits. As people become concerned about the government’s ability to manage its debt, they may tighten their spending, leading to decreased demand for certain goods and services. This can have a direct impact on your job stability, income growth, and even your ability to save and invest for the future.

One way to mitigate this risk is to begin to separate the well-being of your family from the greater economy by creating your own local economy, wherever possible. If that feels far afield, consider ways that you can begin to generate income locally by making a product that friends and neighbors would want and need, or providing a side service within your local community.

If you decide to go this route, contact me at (858) 427-0539 to discuss options to create your side business in the most tax-advantaged and liability protected manner.

Government Programs and Support

Government programs and support play a crucial role in many families’ lives, especially during challenging times. However, when the national debt ceiling is extended, it can put pressure on government budgets, leading to potential cuts or delays in funding for essential programs and services. This may directly affect your access to healthcare, education, housing assistance, and other forms of support that your family relies on.

If you have a child or family member with special needs or an elderly family member you’re supporting, this may affect you even more. Now is the time to get into closer relationship with your nuclear and extended family, marshall all the family resources, and get into conversation around how you can use all the family resources to support all of the children and elders in the best way possible. If you need help speaking to your parents, or considering how best to ensure a lifetime of support for a child with special needs, give us a call at (858) 427-0539 and let’s strategize together.

Tax and Fiscal Policies

Changes in tax and fiscal policies, often influenced by the national debt, can have a significant impact on your family’s finances. As the government seeks ways to manage the national debt, it may consider adjustments to tax rates, deductions, or credits. These changes can directly affect your take-home income, savings, and overall financial planning. Understanding and adapting to these shifts is crucial for effectively managing your family’s budget and long-term wealth and legacy.

You can be fairly certain tax rates will go up to support the debt extension. And, the middle class, especially those who don’t know how to mitigate tax impacts with legal entity structuring, are likely to bear the burden. If you want to leverage the tax-advantaged strategies of the wealthy to keep more money in your local community, and in your family’s bank account, contact us at (858) 427-0539 to discuss options.

Ongoing Guidance for Your Family

We understand that managing your family’s financial and legal well-being can feel overwhelming, especially when it’s hard to know how changes in the law and the financial landscape will affect you. But remember, you don’t have to face these challenges alone. Our mission is to provide you with the support and guidance you need as you navigate changes in the law so you can build a life you love while protecting and preserving your wealth and legacy for the next generation.

While we aren’t financial advisors, we can connect you with a trusted network of professionals and work alongside your financial and tax advisors to make sure your estate plan coordinates with your overall financial plan and protects your family’s wishes and wealth no matter what the future brings.

Ready to protect your family’s wealth and preserve your assets and your story for generations to come? Call us at (858) 427-0539 to learn more.

This article is a service of Brittany Cohen, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

[email protected]

858-427-0539

If you have a current estate plan, I’ll bet you plan to leave your assets to your children outright and unprotected by age 35, or maybe a little later. Go take a look at your estate plan, and see what it does right now. And, if you don’t have an estate plan, and you have kids or other people you care about, contact us today and let’s get that handled for you.

If you do have a plan and it distributes your assets outright to your kids — even in stages, over time, some at 25, then half of what’s left at 30, and balance at 35 (or something along those lines), you’ve overlooked an incredibly valuable gift you can give your children (and the rest of your descendants for generations); a gift that only you can give them. And a gift that, once you’ve died and left them their inheritance outright, is lost and cannot be reclaimed.

Leave your kids a nest egg protected from lawsuits, divorce, and estate taxes.

While you may think to yourself, “my kids’ inheritance doesn’t need to be protected. They aren’t going to get sued.” You may be right, but you may also be overlooking one of the most common “lawsuits” that causes inheritances to be lost everyday, and that’s divorce. If you want to protect the money you’re leaving to your children from their future divorces, even if you love their spouses or expect you will, in the future, you can easily do so using a protected trust.

And, if your child is ever involved in a lawsuit, for example, a simple car accident, or if a business transaction goes bad, what you leave to your child can be protected from all future lawsuits or claims against them.

The best part is that if your child has their own taxable estate when they die, your planning now could save your family 40 cents on every dollar (or more) handed down from one generation to the next.

Save your family up to 40 cents on every dollar — currently — at each generation.

As of 2023, the current federal estate tax rate is 40% — meaning that every dollar passed on over the estate tax exemption rate is taxed at 40%. And it has been as high as 55%. On top of that, many states have estate taxes as well.

This all adds up fast, and can decimate your family’s financial legacy over time. For every million dollars you leave outright to your children, if your children have a taxable estate when they die, could result in  your grandchildren receiving only $550,000, with $450,000 going to the government … unnecessarily.

So, if you want to know that everything you’ve worked so hard to create will stay in your family for generations to come and not be lost to outsiders, leaving your assets to your children protected in a trust we call a Lifetime Asset Protection Trust, instead of outright, is the way to go. And, it can be easily built into your existing estate plan or trust. You just need to ask us to help you get a Lifetime Asset Protection Trust added to your plan.

But how will my kids get to use what I leave to them?

Here’s the best part about leaving your assets to your children in a Lifetime Asset Protection Trust. Not only is what you leave protected, but your children control what you leave them when you decide they’re ready.

After your death, the assets you leave behind will pass to your children (and your grandchildren, great-grandchildren, and so on for successive generations) in a Trust that your child can control,  as the Trustee of the Trust. You can decide when your child is mature enough to act as a Trustee.

As the Trustee of the Trust, your child decides how what you’ve left is invested and what to do with the Trust assets. And your child will even be able to determine the amount of control vs. the amount of asset protection he or she wants based on his or her specific circumstances.

Is this still important if I don’t have much money?

If you only leave your children a small amount of money, this is still incredibly valuable for protection, if you’re leaving assets that will be invested and grown, and not just spent right away on consumables. Some might say it’s even more important because your family has less to lose to taxes, lawsuits, and divorce each generation. And the impact of such losses is much greater.

A mere $10,000 protected now can become millions for the people you love for generations to come.

Imagine that you leave just $10,000 to your child in a Lifetime Asset Protection Trust, and instead of spending that $10,000 or losing it in a divorce, they invest that $10,000 in creating their own business inside their trust, and then grow that business into a million dollar or multi-million dollar venture because of how you chose to leave your child that $10,000 gift … and it’s fully protected for generations.

Secure the future of your family today by speaking to us. We review estate plans and inherited funds with you, ensuring that all legalities are in place so generations can enjoy the benefits according to your wishes. Get peace of mind now – contact us today to get started

This article is a service of Brittany Cohen, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

[email protected]

858-427-0539