Skip to content

Estate Planning: The Ultimate Guide for Retirees

It’s never too early to start planning for your future, whether you are 34 or 54. Most of us want a comfortable life when we get to retirement. At some point, most of us will be a retiree! But trying to figure out how to plan it can be confusing and difficult.

We’ve condensed a guide to help you figure out and plan your estate to get your affairs in order. So whether you are nearing retirement, your future will be secure, and you can have peace of mind.

Understanding an Estate

You may or may not have knowledge or a background in estates or estate planning; we will break down what makes up an estate to be sure we cover all the bases. An estate is the assets someone owns, but an estate is broken down into either a probate estate or a trust estate.

Probate Estate

Also known as a “work estate,” this type of estate is when there is a will. A court session will delegate and distribute the appropriate assets to the right places.

Also, a probate estate includes assets that are involved with “intestate succession,” which is when the court decides how to distribute the assets to your closest relatives; this will also depend on the state laws in whichever state you live in.

Trust Estate

A trust is a legal arrangement where an unassociated third party holds the assets for the beneficiary or beneficiaries. The trust holder will delegate the assets to those the trustee (who formed the trust) assigned and authorized.

A trust can occur when you are still alive, which is different from a will. Trusts are also often made to help lessen the amount of estate tax. There are multiple types of medical, but the ones most often used are revocable and irrevocable trusts.

  • Revocable living trusts: Also referred to as living trusts, these are used to plan out assets if you have a medical condition that will render you unavailable one day. These types of trusts are used for avoiding probate; the probate process is the legal court process of sorting an estate. So by avoiding this process, it means that there is less time wasted in settling an estate. This can help keep estates private and away from the public as well. This type of trust can be edited whenever the grantor wants as long as they are well enough to do so. It’s important to note that these types of trusts do not have any tax benefits.
  • Irrevocable trust: This type of trust is often utilized to decrease estate taxes for those who will receive the estate, the beneficiaries. Once this trust is formed and legally made, there can be no edits or changes, even if the grantor can still do so.

Planning an Estate

Depending on the amount of knowledge and comfort you have with planning your own estate, there are different options to help guide you through the process. An estate planning attorney is one of the best ways to begin the planning process. They know the ins and outs of properly setting up your estate and can get all the appropriate estate planning documents.

Another route you could go is using a service such as “Trust & Will Estate Planning.” Click here to learn about this service which can be helpful for those who are well-versed in estate planning.

Here are the basics of planning a trust:

Evaluate Your Assets

Take into account all of your current assets. This includes property, possessions like cars and jewelry, bank accounts, stocks, or bonds. Also, life insurance policies, 401k plans, HSA and IRA accounts, or owned businesses should be accounted for as well.

Map Out Liabilities 

Be sure to remember that owed debts must be paid off, and a plan of how this will happen is important to dictate when planning an estate. This can be debt on credit cards, medical bills, loans, and even mortgages.

Decide What You Want for Your Family Members

Some people split their estate up between children or siblings. Depending on your relationship or how you want it to be dispersed, this should be written in your estate.

You’ll want to detail everything so there is no legal battle over unclaimed things once your estate needs to be given out. This includes writing a will, having a beneficiary on your life insurance, and even noting who is the guardian of children if applicable.

Set Up Directives 

This includes trusts and setting up a durable power of attorney for financial and medical situations. A medical power of attorney can make healthcare decisions for you if you are unable. Additional medical documents also plan out your requests and health care directives (directions for your medical care).

A durable financial power of attorney will take care of your current affairs and complete your documented requests if you are medically incapacitated. This can include paying your bills and taxes and taking care of your assets. It is important to have someone you trust as either power of attorney as they will make decisions that can affect your assets and health.

Tax Planning

Ensuring your taxes are taken care of is important in life and even death. Your estate can be taxed depending on where you live. There are usually no or limited federal taxes unless you have a wealthy estate.

Some states have estate taxes and even inheritance taxes, which means that those who receive your estate must also pay taxes on it.

Establish a Plan

The most important part of planning an estate is getting the correct legal documentation to clarify what goes to who, where you want parts of your estate to go, and how you would like your assets dealt with.

It’s never too early to plan out your estate, even if it’s as simple as a wedding ring and any real estate you own. You want the comfort of knowing that your loved ones won’t have to squabble over it or even be stressed about what to do with it. You may need to revise your plan a few times throughout your life.

Planning the Future

Not only is it important to plan out your estate, but there are additional things to consider. Unfortunately, you must also think of and plan out your funeral or end-of-life care. You must think of those dark choices.

Would you want to be on life support? If you want to be buried, is there a specific place in mind? Maybe you’d rather have cremation or body and organ donation. It is important to have your final wishes written in a legally binding document, especially if you have a preference. It can also take away the stress from family members if you have it planned out and financially covered.

Additionally, if you own a business, you need to plan out what would happen if you were to pass on. Would it be continued or closed?

If you plan on continuing it, you need to legally have it planned out who will own and run it. Or if you plan on closing it, who will receive the money, or if you make products, will they be sold or thrown away? These are decisions that not everyone will think of.

Last Will and Testament

A will is a legal document only after your passing, unlike a general estate plan that can occur if you become medically incapacitated. Your will must specify where your assets will be dispersed and who will receive what parts of your estate. This will include who will be the guardian of your children, your pets, your car, jewelry, lawnmower, anything and everything!

Your will guides your family and estate planning lawyer to complete your final wishes how you want them. As previously stated, it is never too early for a will; it can be a great comfort to those who must deal with your belongings if you were to pass. You can even request a hot pink casket if that’s what you’re into.

Protect Yourself

An estate with a plan is a great way to protect your money, finances, and yourself. As most of us know or have learned, you never know what can happen, and it’s best to get a jump start on protecting what you currently have as well as plan for the future.

Even if you are not quite at retirement age, it’s best to start planning your finances now. This article is a great way to start learning more about financial planning, hoping to grow your finances as well.

Stepping Back

It can be overwhelming and a bit melancholy to have to think about planning your estate and making a will. Unfortunately, it is a part of life, and it’s not only a great decision to start now but a smart one too!

Having everything planned out takes a lot of stress and prevents chaos should something ever happen, whether that is your passing or a medical situation that leaves you unable to make decisions.

Once everything is properly settled and signed, you will feel the weight off your chest and a sense of ease knowing that not only is your precious home, dog, and card collection taken care of, but so are you.

Sources:

Think You Are Too Young to Need An Estate Plan? | Flagstaff Law Group

Estate Planning Vs Will | SmartAsset

Estate Planning Checklist | NerdWallet

What Is an Estate Attorney | MetLife

Trusts | NerdWallet