As the New Year rolls around, it’s natural to think about fresh starts and future goals. For many of us, retirement planning is at the forefront of those reflections. While you may already be contributing to a 401(k) or IRA and dreaming of those golden years, there’s another critical piece of the puzzle that often goes overlooked: estate planning.
We believe estate planning and retirement go hand in hand. If retirement represents the years you’ve worked hard to enjoy, estate planning ensures that all that hard work is protected, for both you and your loved ones. With a new year ahead, now is the perfect time to review your plans, update your documents, and take steps to secure your legacy. Let’s walk through some practical tips to guide you through this process.
Start by Reviewing What You Have
Estate planning often begins with a simple question: “What do I already have in place?” Many people don’t realize they already have elements of an estate plan, whether it’s a will, a trust, or even beneficiary designations on financial accounts. However, as life changes—through marriage, children, a new home, or retirement—those plans need updating.
Take some time early in the New Year to review the following:
- Your Will or Trust: Does it reflect your current wishes? Have there been changes in your family, such as marriages, divorces, or new grandchildren, that need to be addressed?
- Beneficiary Designations: Check the beneficiaries listed on your retirement accounts, life insurance policies, and payable-on-death accounts. These designations override what’s in your will, so it’s important to ensure they match your intentions.
- Powers of Attorney: Do you have someone designated to handle your finances or make medical decisions if you’re unable to? If not, it’s time to create these documents.
Starting with what you already have not only brings peace of mind but helps you identify areas where your plan may need a little fine-tuning.
Align Your Estate Plan with Your Retirement Goals
As you approach or enjoy retirement, your priorities shift. You’re likely focused on maintaining your lifestyle, ensuring your healthcare needs are met, and leaving a legacy for your loved ones. Your estate plan should align with these goals.
Consider these steps to make sure your estate plan supports your retirement:
- Protect Your Assets: If you’ve spent years building your nest egg, you want to ensure it’s protected. Setting up a trust can help shield your assets from unnecessary taxes, legal fees, and even creditors.
- Plan for Long-Term Care: No one likes to think about the possibility of needing long-term care, but the reality is that it’s a significant expense for many retirees. A well-thought-out estate plan can incorporate strategies to cover these costs without depleting your savings.
- Simplify the Process for Your Family: Creating clear, legally sound documents reduces the burden on your loved ones. For instance, a trust can allow your heirs to avoid probate, saving time, money, and stress.
Consider the Tax Implications
Retirement often means shifting from earning an income to drawing from your savings, pensions, or retirement accounts. While you may already be thinking about income taxes, estate taxes are another critical consideration. The federal estate tax exemption is high, but it’s always worth keeping an eye on potential changes in tax laws.
In Arizona, there’s no state estate tax, but that doesn’t mean taxes won’t come into play. If you own property in another state, have significant assets, or plan to gift money to family members, working with a professional to structure your estate plan can help minimize the tax burden on your heirs.
Plan for the “What-Ifs”
Life is unpredictable, and that’s precisely why estate planning exists. Retirement is a time to enjoy the fruits of your labor, but it’s also an opportunity to prepare for unexpected events. A comprehensive estate plan addresses contingencies like incapacitation, sudden illness, or even disputes among family members.
Here’s what you can do to prepare for life’s “what-ifs”:
- Update or Create a Living Will: Also known as an advance healthcare directive, this document outlines your preferences for medical care if you’re unable to make decisions yourself.
- Choose the Right Fiduciaries: Whether it’s an executor for your will, a trustee for your trust, or a financial power of attorney, selecting trustworthy individuals is key to ensuring your wishes are carried out.
- Communicate with Your Family: Open discussions about your plans can help prevent misunderstandings or disputes down the road. While these conversations may feel uncomfortable, they’re an important part of protecting your legacy.
Take Small Steps Toward Big Goals
Estate planning can feel overwhelming at first, especially if you’re starting from scratch. The good news is that you don’t have to tackle everything at once. Taking small, deliberate steps can make the process manageable and even empowering.
Here are a few ideas to get started:
- Schedule a meeting with an estate planning attorney to review your current plan or discuss creating one.
- Organize important documents like deeds, account statements, and insurance policies in a secure, accessible location.
- Make a list of your assets, including real estate, bank accounts, investments, and personal property, to ensure nothing is overlooked.
- Set a goal to complete one piece of your estate plan—whether it’s updating a beneficiary designation or creating a healthcare directive—within the next month.
By breaking the process into smaller tasks, you’ll build momentum and make meaningful progress toward protecting your future.
The Gift of Peace of Mind
One of the greatest benefits of estate planning is the peace of mind it provides. Knowing that your loved ones will be cared for, your wishes respected, and your legacy preserved is a priceless gift. As you head into the New Year, take comfort in knowing that you’re setting the stage for a secure and fulfilling retirement.
What Better Time Than the New Year to Get Your Affairs In Order?
At KEYTLaw, we understand how important it is to plan for retirement and the future while enjoying the present. Estate planning doesn’t have to be complicated or intimidating—it’s about taking steps to protect what matters most to you. Whether you need to create a new plan or update an existing one, we’re here to help. Contact us today to schedule a free consultation and make 2025 the year you take control of your legacy.
From all of us at KEYTLaw, we wish you a happy and prosperous New Year. Here’s to a year filled with peace, purpose, and plenty of joy!
