A Guide to Estate Planning As You Enter Retirement

Are you looking for a way to protect your assets and plan for the future? You’re not alone. Many people are concerned about their financial security as they enter retirement.

However, it might be difficult to know where to begin when preparing for this part of life. This guide can help you create an estate plan to ensure your wishes are followed when the time comes.

Key estate planning topics to consider include:

  • Passing on your wealth
  • Planning for your long-term care
  • Reducing taxes and estate fees

Let’s explore each component of estate planning in further detail.

Passing on Your Wealth to Your Loved Ones

There are many estate planning strategies you can use to distribute your assets to your loved ones. Some of the most common include:

  • A will – You can use a legal document called a will to dictate how you want your estate distributed after death.
  • Retirement plan beneficiaries – You can designate a beneficiary for your 401(k), IRA, or other retirement plans to ensure the funds are distributed according to your wishes.
  • A trust fund – Your estate will be passed on to beneficiaries according to the terms of your trust.

Create an estate plan using a combination of these strategies, so you can maximize the benefits for your loved ones. For example, you can include a living will in your estate plan to ensure you receive the end-of-life care that meets your needs.

Start by gathering the financial information and documents your next of kin will need after you pass. These should include:

  • Assets you own, including bank accounts and retirement plans
  • Liabilities such as credit card debt or other loans
  • Estate planning documents such as a will or trust (if you already have them)
  • Insurance policies and funeral plans
  • Income and expenses you expect to receive in retirement
  • Deeds to your home or car
  • Other legal documents

Once you have all of your documents in order, make sure your loved ones or estate planners know where to find them. If they don’t know where to look, they won’t be able to carry out your estate plan.

Most importantly, you need a will, even if it’s just to name your executor. If you don’t have one, your assets are likely to go through a complicated probate process that may be difficult for relatives.

It’s always a good idea to regularly review the beneficiaries for any retirement plans and insurance policies you have.

Create A Financial Plan

You will need a financial plan to determine what your projected wealth will be in the future. Use a consumer-based financial planning application such as WealthTrace or hire a financial planner to build your plan for you. If you are not projected to have a lot of money at your death, you might not need to worry about an estate plan. Make sure you do research before hiring any professionals to help with your finances, as there are key differences between commission-based financial advisors and fee-only financial planners. Generally, you will want to go with the latter of these options. What is a fee only financial planner? A fee-only financial planner is paid a set rate for the services they provide their clients or a percentage of the assets they manage. Their only compensation comes from fees paid directly from their clients instead of receiving commissions on the sale of a financial product.

Protecting Your Long-Term Health Care

One of the biggest estate planning concerns, especially during retirement, is long-term care. You may require assistance with daily living activities, such as dressing, bathing, and eating. If you don’t plan ahead for long-term care expenses, your estate may be drained by the cost of care.

You have several estate planning options to help protect your wealth, so you can maintain a high quality of life.

Set Up a Living Will

A living will be a legal document that allows you to map out your end-of-life care preferences. You can specify whether you want to receive life-sustaining treatments if you’re incapacitated.

Be sure to place a copy of the agreement on file with your physician and make one for yourself so that your family members are informed.

Designate a Health Care Power of Attorney

A health care power of attorney, or health care proxy, allows your family to appoint a trusted person who can make medical decisions on your behalf when you’re no longer able to. You should have one form naming the person who is responsible for your estate plan and another to name a health care proxy. You should choose a health care proxy who is familiar with your wishes.

Assign Powers of Attorney for Financial Decisions

You can also assign a trusted person to make financial decisions for you, such as paying your bills and managing investments.

You can choose to designate full or limited powers of attorney:

  • Full power of attorney gives the person you name full authority to act on your behalf for any estate planning decisions.
  • Limited power of attorney allows them to make estate planning decisions only for a specific purpose, but they can’t make any withdrawals.

This is a good estate planning strategy if you intend to leave your assets to a group of heirs who may have conflicting financial interests.

Reduce Your Taxes

You can minimize estate taxes by taking advantage of tax-saving strategies. For example, you could leave your estate to a surviving spouse who is exempt from estate taxes.

While a will is suitable for passing down your assets, if you want more control and privacy, then consider setting up a trust. A trust also lowers the tax burden on your estate.

Another option is to convert your traditional retirement plan into a Roth IRA. The Roth IRA is a great way to save for retirement without having to worry about the required minimum distribution. This means the account can continue growing tax-free until it’s passed on. Your heirs will also only have to pay taxes once if their inheritance comes from an IRA account that has been open for less than five years.

Final Thoughts

While estate planning can be overwhelming at first, the goal is to create a plan that meets your objectives and provides for your loved ones after you pass. By taking these steps, you can feel confident that your estate plan is in place, and you can stay on track. For more estate planning strategies, talk with your estate planner or financial advisor.


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