It may be hard to think about life after you’re gone. It’s not generally something that we like to talk about or even think about, but it is important to be prepared for. Although these are tough conversations, there is a lot of reasons why estate planning is so crucial to your overall plan for retirement.
First, it is important to protect your needs and properly distribute your wealth based on your personal wishes. Your estate plan should contain specific instructions for any instance where you are unable to make decisions for yourself. This is also where you can dedicate a power of attorney, who can help make sure that these needs are fulfilled as you originally intended. Your power of attorney can also make sure that the state does not become in control of your finances. If you don’t have proper documents, this is what could happen. These documents include a designation of beneficiaries to your investment accounts, life insurance policies, and a will or trust.
If you have an estate plan in place, you can employ certain strategies to help minimize transfer taxes. Taxes such as the estate tax, generation-skipping transfer tax and gift tax are all relevant to estate planning. You can become more tax efficient by planning for the transfer of assets beforehand. At O’Donnell Financial Group, we can help you learn more about tax considerations for the estate planning process and make sure you have a complete estate plan.
Other reasons why estate planning is important include protecting your family’s wealth and preparing future generations for wealth. You and your family worked hard for your wealth and you deserve to decide where it ends up. All too often, family’s with increased wealth become targets for frivolous lawsuits, which is why insurance may be necessary in your overall estate planning strategy. On the other hand, when you pass your wealth down to a new generation it is important to prepare them by having an open discussion about wealth. It can be an emotional conversation, and starting the discussion early on can help remove some of the emotion and conflict that the next generation may feel about the family’s wealth.
Lastly, some retirees decide to put philanthropic goals in their will. This may include ideas for a family foundation, a charitable trust or a donor-advised fund. By talking about your plans with family and developing a plan in your estate documents, you can ensure that your vision is clear. So remember, don’t forget about estate and legacy planning in retirement!
As hard as it can be to think about a plan for when you pass, passing without a plan can be even harder on your loved ones. This is why estate planning is so crucial. As financial planners, we can help you save your family from added hardships by creating an estate plan fully equipped with tax minimization strategies. Click here to schedule your complimentary, no cost, no obligation financial review today!
