5 Estate Planning Tips For Retirees

As you near retirement, your approach to estate planning is different from other stages of your life. When you no longer earn a salary and benefits from a job, how will you sustain your new lifestyle? You must be able to afford your needs while securing your family’s future during retirement. This is where smart estate planning can help. Here are 5 Estate Planning Tips to make your retirement years productive and meaningful.

Tip #1 Maximize Insurance and Retirement Accounts

If you’re looking to pass money to heirs tax free, start converting traditional IRA (Individual Retirement Account) into Roth IRA. The converted amount is subject to regular income taxes, but withdrawals – either by you or your heirs – are tax free. With tax rates at an all-time low, it may be better to pay taxes on the money now rather than later.

Many people with young children decide to purchase life insurance to replace their income if they have an untimely death. However, life insurance can also be an effective estate planning strategy for a financially secure retirement. Life insurance can provide beneficiaries with tax-free funds and provide replacement income for your spouse, your children, your elderly parents, or other individuals who depend on you for financial support.

Tip #2 Plan for Disability

A comprehensive estate plan should include provisions in case you become disabled. Several documents you should create include:

Power of Attorney

A power of attorney gives someone the right to act on your behalf regarding your financial affairs. If you get sick or hurt, your agent can step in and take care of your finances. This lets you name someone you trust to manage your day-to-day finances.

Living Will

A living will puts your wishes regarding end-of-life care in writing. Without it, you may have to undergo extreme medical measures that you would not have asked for if you were able. Also, your loved ones could wind up depleting your estate by insisting on such extreme medical measures.

Advance Health Care Directive

An advance health care directive allows someone you chose to make medical decisions for you if you can’t make them for yourself.

Tip #3 Set up a Trust

If you want to keep your money in the family for as long as possible, a trust can be used to ensure that money is passed from one generation to the next and is protected from divorces, lawsuits and creditor claims.

A trust allows you to designate a trustee to manage your finances according to your instructions. For example, you can direct your trustee to invest in your children’s college education rather than letting minors spend all of their inheritance.

You can instruct your trustee to pay for your family’s medical needs first, or to provide distributions to your children when they are older, like 30 or 40. You can also instruct your trustee to pay for your medical expenses and insurance payments out of trust funds if you become disabled.

Trusts can be set up in several ways. Most people choose to have a revocable living trust, which allows them the most control to change or update their trust when necessary.

irrevocable, or permanent, trusts offer many tax benefits. When money is put into an irrevocable trust, the assets no longer belong to you. They belong to the trust itself. As a result, the money cannot be subject to estate taxes. While a trustee ultimately controls the money, you can create stipulations on its use, and money can be distributed from a trust even while you are alive.

Setting up a trust can allow you to avoid expensive court cases, such as probate and conservatorship proceedings. Additionally, a trust can restrict disbursements so that your property is used only in the way you intended.

Tip #4 Create a Will

Writing a will is the most basic of estate planning strategies. This document stipulates how your assets will be divided after your death.

Without a will, your estate will be divided in probate court, meaning someone else decides who gets your money. Having a will doesn’t mean your heirs avoid probate though. A will still has to go through probate.

It’s also a good idea to review beneficiary information after any major life change, such as the birth of children, the death of a family member, marriage, or divorce.

Tip #5 Donate or Give Away Your Assets

As of 2022, the IRS allows individuals to give up to $16,000 per person per year in gifts. If your goal is to avoid estate taxes, these gifts can decrease the value of your estate. The money is also tax-free for recipients of the gifts.

Another way to reduce your estate value is through charitable donations. Rather than giving a one-time gift, consider setting up a donor-advised fund. This option would give you an immediate tax deduction for money deposited in the fund, and then lets you make charitable grants over time. A child or grandchild could be named as a successor in managing the fund as well.

However, be careful about giving away assets that appreciate in value, such as stocks or a house, which receive a step-up in basis when part of an estate. That means the taxable amount of an asset is adjusted upon the owner’s death and, as a result, it may be beneficial to transfer certain assets after death rather than before.

To kick-start your Retirement Estate Planning process, DOWNLOAD Your Free Estate Planning Guide

What’s next?

Complex rules and changing tax laws can make estate planning difficult. However, ignoring it can leave you and your family bereft during your retirement. Even if you don’t have a lot of money in the bank, the right attorney can make the most out of estate planning tools and strategies so that you can live your best years in retirement.

Start taking action now with your estate planning by booking your free consultation with our team at Crider Law Group.


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Davis, CA 95616

333 University Ave, Suite 200
Sacramento, CA 95825

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Roseville, CA 95616

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Monterey, CA 93940

San Antonio
18756 Stone Oak Pkwy, Ste 200
San Antonio, TX 78258

We operate on an appointment-only basis other than our Davis office.

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