If you want to begin your retirement with peace of mind, you should make setting up your estate plan a priority.

Estate Planning and Retirement: Why You Need an Estate Plan Before You Retire

Estate planning is a very important part of retirement planning. Although technically you can make an estate plan after you retire, it’s not wise to put it off. We know it can be difficult to tackle some estate planning topics, like writing your will or setting up a medical power of attorney. However, if you want to begin your retirement with peace of mind, setting up your estate plan in advance is a must.

When Is the Best Time to Make an Estate Plan?

No matter how old you are or how soon you plan to retire, the answer to this question is always: NOW. 

Estate planning covers far more than who inherits your property. For example, by drafting an advance directive or “living will,” you can stipulate what type of medical care you wish to receive and spare your loved ones the grief of having to make end-of-life decisions for you. 

Estate planning can help you make the most of your assets by minimizing taxes and avoiding probate. You can also use estate planning to protect yourself financially and physically if you are ever incapacitated by an accident or illness. You can even use your estate plan to make sure your pets are provided for

Estate planning covers all of these aspects and more, so before you retire, make sure you have an estate plan in place. It’s never final—you can make changes at any time. But once you have an estate plan set up, you can enjoy your retirement without having to worry about things like whether or not you have a will or who you want to inherit your family heirlooms

Estate Planning Before Retirement Is Crucial for Business Owners

If you own a business and you’re planning to retire soon, you’ll need to make sure that you plan for the transition ahead of time. Do you want to sell your business or pass it down to another family member? If you have a successor in mind, you can leave your business to them in your will, or you can pass ownership on to the next generation through a living trust. 

A living trust is a much safer option than gifting or selling your business outright. Naming your heirs as successor trustees will protect their ownership interests against things like divorces and lawsuits. This approach also enables you to continue running your business without interruption during your lifetime.

How to Include Your Retirement Accounts in Your Estate Plan

Since retirement accounts like your 401K or Roth IRA are not probate assets, you don’t always need to include them in your estate plan. The beneficiary designations on those accounts will override any instructions you leave in your will. And since retirement accounts do not have to go through probate, your beneficiaries can cash out or start taking distributions right away.

Although it’s not necessary to place your retirement accounts in a trust, this can be a good option in certain situations. If you have a financially irresponsible beneficiary, or if your beneficiary is a minor or has special needs, funding a trust with your retirement accounts may be advantageous. But since there are strict rules about who can inherit a retirement account, it’s best to consult an attorney before you name your trust as beneficiary of the account.

Meet with an Estate Planning Attorney in the Phoenix Area

Estate planning is often a complicated process, and since every person’s situation is unique, a little guidance goes a long way. Meeting with an estate planning attorney will help you make sure that you have all of the details covered and that all of your documents are legally valid and up-to-date. Before you retire, it’s important to review your current estate plan or set one up if you haven’t yet done so. 

The attorneys at Phelps LaClair are here to guide you through every step along the way. We can answer all of your questions about estate planning and how it affects your retirement. If you live in the Phoenix area, contact us today to schedule a consultation.


Photo by Sagar Patil on Unsplash used with permission under the Creative Commons license for commercial use 4/18/2024. 

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