Having $500k+ in retirement savings is something to be proud of, but it also necessitates thoughtful estate planning. This guide can equip you with the knowledge to help navigate this process and help ensure your assets are distributed according to your wishes.
1. Take Inventory of Your Retirement Assets:
- List all your assets: Include retirement accounts (IRAs, 401(k)s), investment accounts, real estate, life insurance policies, and any other valuable possessions.
- Determine your total liabilities: This includes debts like mortgages, car loans and any outstanding balances.
- Gather important documents: Make copies of beneficiary designations, wills, titles, insurance policies and anything else that details your assets and ownership.
2. Define Estate Planning Goals for Retirement:
- Who are your beneficiaries? This could include your spouse, children, grandchildren, charities or any combination you choose.
- How do you want your assets distributed? Do you want equal distribution, or are there specific amounts or conditions attached to certain inheritances?
- Do you have any specific wishes for inheritance timing or conditions? For example, do you want certain assets held in trust until beneficiaries reach a certain age?
3. Understanding Wills, Trusts, and Other Estate Planning Options:
- Will: A legal document outlining your wishes for asset distribution after death. It is crucial to have a will, but it is just one piece of the puzzle.
- Trusts: Legal entities holding assets for beneficiaries. Trusts can offer potential tax advantages and allow you to exert more control over how and when assets are distributed. There are several types of trusts, so consulting with an attorney is key to choosing the one that aligns with your goals.
- Beneficiary Designations: These allow you to name beneficiaries for retirement accounts and life insurance policies. Assets with designated beneficiaries typically bypass probate (court process), ensuring a smoother and faster transition.
- Power of Attorney: This assigns someone legal authority to manage your finances if you are incapacitated.
4. Consider Tax Implications in Estate Planning:
- Estate Tax: The federal estate tax applies to estates exceeding a certain threshold (subject to change).
- Work with a tax advisor to understand potential tax liabilities and explore strategies for minimization. This might involve gifting strategies or specific types of trusts.
5. Partner with Estate Planning Professionals:
- Estate Planning Attorney: An experienced attorney can draft legal documents like wills and trusts, ensuring they comply with state laws and your wishes.
- Financial Advisor: A qualified financial advisor, like those at McAdam Financial, provides guidance on tax implications, asset allocation within your estate plan and integrating it with your overall retirement strategy. McAdam Financial’s licensed team of experts can help you develop a comprehensive financial plan that considers your estate planning goals. As a fiduciary, McAdam Financial is legally obligated to act in your best interests when providing financial advice.
Additional Steps for Comprehensive Estate Planning:
- Review and Update Regularly: Estate plans should be reviewed periodically, especially after significant life events (marriage, divorce, death of a beneficiary).
- Communicate with Beneficiaries: Inform your beneficiaries about your estate plan, including the location of important documents.
- Consider Digital Assets: Determine how to manage account access and distribution after your death.
- Consider a Single Point of Contact: Working with a financial advisor comes with another big advantage — one person who knows your financial situation just as well as you do. They can help to inventory, locate and transition accounts according to your wishes after your passing.
This is a general guide. Consulting with qualified professionals like estate planning attorneys and fiduciary financial advisors is crucial for creating a personalized and effective estate plan that meets your specific needs and goals. By following these steps and partnering with McAdam Financial, you can get help ensuring your legacy is protected and your wishes are carried out.
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Written by McAdam Financial as of 6/18/24. This article is provided by McAdam LLC (“McAdam” or the “Firm”) for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this article is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax, or legal advice. Certain information contained in this report is derived from sources that McAdam believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.
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