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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 some estate planning tips to make your retirement years productive and meaningful.


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.

Plan for Disability

A comprehensive estate plan should include provisions in case you become disabled. In Texas a power of attorney includes several documents:


Statutory Durable Power of Attorney

Medical Power of Attorney

Declaration of Guardian

Directive to Physicians ad Family

Disposition of Remains Document


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, but in Texas, it ensures your wishes are documented.  One of those wishes can be that the Will is handled as an independent administration.  This means with a limited amount of court involvement, usually just proving up death.


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.


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.


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.

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