Put A Top-Notch Attorney On Your Side

4 steps people near retirement should take for estate planning

On Behalf of | Jun 7, 2024 | Estate Planning

As retirement approaches, people may begin to think seriously about estate planning. Creating a plan ensures that other individuals handle a person’s assets and heirlooms according to their wishes after they die.

Since no one can predict what will happen in life, remembering to plan for the future is important.

1. Create a comprehensive and detailed will

A will is a legal document that states how other individuals will give away a person’s assets after their death. Without a will, the state decides how to distribute assets, which may not align with the person’s true wishes.

When creating a will, it is important to list all assets and designate who will receive each one. People should also name a trusted person who will carry out the instructions in the will, also known as an executor.

2. Designate beneficiaries

Many assets, such as life insurance policies, retirement accounts and bank accounts, allow people to name beneficiaries. These are the individuals who will receive the assets upon the account holder’s death.

It is important to review and update beneficiary designations regularly. Life changes, such as marriage, can affect these choices and keeping beneficiary information up to date ensures that assets go to the intended recipients.

3. Set up a power of attorney

A power of attorney gives a trusted person the authority to make financial and medical decisions on someone else’s behalf if they become unable to do so. There are two types. The financial power of attorney allows someone to handle financial matters, such as paying bills or managing investments. The healthcare power of attorney lets someone make medical decisions if the person becomes incapacitated.

4. Plan for estate taxes

Estate taxes can take a significant portion of an inheritance, which means it is wise to understand the tax laws and plan accordingly. One way to reduce estate taxes is by giving gifts to heirs while still alive and paying special attention to the annual limits to make the gift tax-free.

Planning ahead may seem overwhelming at first, but it also allows individuals to have freedom and security for their assets. A person can provide peace of mind for themselves and their loved ones with a solid estate plan.