Most people have created some type of retirement plan as well as an estate plan; however, people often fail to understand why the two need to be considered together instead of independently.
Think of it this way. Your retirement plan involves money and assets. Your estate plan also involves the same money and assets. Therefore, when you create one plan, you should consider how it will affect the other plan. Likewise, when you change one, you will likely need to change the other as well.
Take, for example, assets that you currently have in savings or in an investment account. You may be counting on those funds to support you during your golden years. Your current estate plan may direct that those assets go to your spouse or children upon your death. What happens, however, if you find that you need to place those assets in an asset protection trust in order to qualify for a program such as Medicaid as you age? A change such as that will also require you to make a change to your estate plan in the form of the creation of a trust.
By the same token, your current estate plan may include trusts for your young children in the event of your unexpected death. As you age, however, you may decide to terminate those trusts and use the funds for your own retirement once your children are grown and self-sufficient.
Because the two go hand in hand, you should make a point of reviewing one whenever you make a change to the other.
- The Magic of Grantor Trusts - November 1, 2023
- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - October 26, 2023
- Understanding the Importance of the Simultaneous Death Act - October 19, 2023
