5 Estate Planning Changes To Make After Retirement
Written by
David Nadelle
Edited by
Zuri Anderson
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The average American spends so much time planning for retirement that when the end of their work-life finally arrives, they don’t think there’s anything left to do.
Your financial and familial dynamics have changed since you began the process of estate planning years ago, so updating your affairs after retirement is essential to provide for your loved ones and get the best out of the rest of your life.
This is particularly true with Secure 2.0 Act measures coming into effect this year that will benefit retirees. According to Fidelity, people in or near retirement (or years away from it) need to address new rules concerning catch-up contributions, required minimum distributions (RMDs), automatic enrollment changes, Roth IRA matching and more.
For those who’ve already stopped working, here are five basic things you should be reviewing and updating every three to five years or after any major life event, like the death of a spouse, a new grandchild or a significant change in tax law.
Revise Your Current Estate Documents
Make sure the beneficiaries, executors and trustees in your will or revocable living trust represent your current desires. After retirement, power of attorney agreements for financial and medical decisions frequently need to be updated. If you have a trust, think about using a pour-over will to capture any assets that aren’t already titled in the trust.
Review Your Beneficiary Designations
Relationships change throughout your life, so you should be on top of adding new beneficiaries and removing any that are out of date in retirement. According to Roulet Law Firm, PA, beneficiary delegation override the conditions set out in your will, so life insurance policies, retirement and investment accounts and payable-on-death (POD) designations have to be updated when you retire.
Minimize Your Tax Burden
You should always be looking to minimize your taxable estate and gaining advantages by gifting up to the yearly exclusion (19,000 per recipient in 2025, per the IRS), about making charitable contributions through a charitable trust or donor-advised fund (DAF). Examine IRA distribution plans (such as Roth conversions) to reduce heirs’ tax obligations.
Plan for Long-Term Care Costs
You’ll need to consider long-term care planning — for example, Medicaid asset protection trusts — if nursing care costs are going to be a problem, per Hargrave Law, PC. But you’ll also need to know the nitty gritty of policies, like Medicaid’s asset transfer rules and Look Back Period. Alternatives like hybrid life insurance plans with long-term care (LTC) riders or LTC insurance from an independent coverer should always be explored.
Account for New Assets
Think of your estate plan as a flexible document to be updated when new assets are acquired in retirement. A new property or valuable collectible will be need to be appraised and designated to a specific person to whom you wish to entrust your newer assets. This includes any digital asset directives for online accounts and cryptocurrencies, which the IRS treats as personal property for federal tax purposes.
Updating your estate documents can ensure your retirement plans remain up-to-date, minimize your tax responsibility and provide for your loved ones according to your wishes. Consulting a financial advisor or estate planning lawyer is a smart move, but a smarter one is discussing your wishes and explaining any trusts or special arrangements to your family and heirs to avoid confusion and disputes down the line.
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