Retirement often brings greater urgency to creating or updating an estate plan.
While many people long for retirement to enjoy more time for family, friends, or hobbies, this milestone does not mean people no longer have responsibilities or challenges.
This life stage ushers in new healthcare considerations, financial priorities, and estate planning needs.
By prioritizing estate planning in retirement, retirees can avoid probate delays, unnecessary taxes, or conflict among heirs.
Working with an experienced estate planning attorney can ensure your retirement goals and financial security are addressed in your plans.
Although retirement is a great time to travel, it is also a key time for estate planning.
Retirement is not a time for acquiring wealth.
Instead, seniors shift their focus to managing their assets and preparing for their distribution.
Estate planning for retirees should address efficiently transferring assets to beneficiaries, should legally document financial and healthcare decisions, should minimize probate and tax costs, and should communicate their wishes so family members understand and respect them.
When people neglect to create a legally valid estate plan, state laws will govern asset distribution.
Many people find the intestacy laws do not align with their preferences for distribution.
How can you create an effective estate plan in retirement?
A last will and testament is used to distribute estate assets through probate proceedings.
It is also used to appoint an executor to oversee your estate administration.
Many retirees have created estate plans while still in the workforce and then neglected to review their documents.
People must review and update their last will and testament to ensure their beneficiaries are accurate, their appointed executor can efficiently manage their estate, and all marriages, divorces, and births are accounted for in their plan.
A trust is used to provide greater control of asset distribution while simultaneously providing flexibility.
Another benefit of trusts is the avoidance of probate for assets titled to the trust.
There are two primary categories of trusts.
Revocable living trusts allow the trustmaker to continue managing the assets during his or her lifetime.
Irrevocable trusts require surrendering personal control of the assets to an independent trustee but provide high tax benefits and greater asset protection.
When irrevocable trusts are used as special needs trusts, they allow disabled heirs to maintain eligibility for government benefits.
An experienced estate planning attorney can help those in retirement determine the type of trust that is most beneficial given their circumstances.
While incapacity can strike any time, aging bodies can increase the risk of incapacity through medical events or accidents.
Seniors must prioritize designating trusted individuals to serve as healthcare and financial powers of attorney.
Healthcare powers of attorney are used to appoint a person to make medical decisions based on your personal preferences and wishes.
Financial powers of attorney are implemented to give someone the legal authority to pay bills, manage finances, and oversee investments.
If you do not have these powers of attorney in place, your loved ones will be forced to request court intervention to designate a guardian.
This can cost precious time in the midst of critical decisions.
An advance directive is also known as a living will.
This document gives clear direction on the medical treatments you do or do not desire if you face incapacity or serious illness.
Rather than having to guess your wishes, your loved ones will be able to confidently make challenging medical decisions.
Advance directives commonly address preferences for palliative care or pain management, the use of life-prolonging treatments, organ donation, and end-of-life wishes.
Most retirement assets can be passed to heirs via beneficiary designations rather than your last will.
You should review your beneficiary designations if you have IRAs, 401(k) plans and insurance policies.
Retirees should make sure beneficiaries are listed accurately on all accounts.
Because it is possible for primary beneficiaries to predecease you or die simultaneously, contingent beneficiaries should be named.
Updates should be made to account for life changes like divorce or remarriage.
As of 2025, retirees must take required minimum distributions (RMDs) from traditional retirement accounts starting at age 73.
Not making these withdrawals could trigger steep tax penalties.
Those in retirement should plan to take their RMDs to avoid unnecessary taxes strategically, ensure they have the appropriate income level for their financial needs, and align distributions with their charitable giving goals.
The federal estate tax exemption level in 2025 is $13.99 million.
Any assets exceeding this amount will be subject to federal estate taxes.
In addition to federal estate taxes, some states have their own estate taxes and set the threshold much lower.
Retirement is a key time to evaluate and incorporate strategies for reducing estate tax liability.
What are available strategies?
Gifting assets.
Americans can take advantage of the annual gift tax exclusion.
This allows you to transfer a certain amount of wealth each year without triggering the need for a gift tax return.
In 2025, the annual exclusion amount is $19,000 per recipient.
Charitable donation.
By gifting directly to non-profits or creating a charitable trust, retirees can reduce the taxable value of their estate.
Trust planning.
You can remove assets from your taxable estate by establishing an irrevocable trust and transferring assets to it.
The likelihood of someone needing long-term care increases significantly in retirement.
In addition to standard healthcare expenses, in-home caregiving, and nursing home stays can be costly.
It is essential to prepare for these expenses so you can cover costs without depleting assets.
What options are available?
Long-term care insurance.
Long-term care insurance helps provide coverage for assisted living, nursing homes, or home healthcare expenses.
Medicaid planning.
Medicaid planning allows you to preserve some of your assets while simultaneously allowing you to qualify for Medicaid benefits. You will need to engage the assistance of an elder law attorney to help you navigate the rules and regulations impacting eligibility. These rules and regulations can be complex and fraught with legal traps for the unwary.
Hybrid life insurance policies.
Some life insurance policies offer long-term care benefits in conjunction with traditional coverage.
Estate planning documents are only helpful if they can be accessed when needed.
Retirement is a good time to organize your will and trust documents, power of attorney documents, advance directives, deeds, titles, asset records, insurance policies, and retirement account statements.
By giving a trusted loved one or attorney a copy of your documents, you can prevent confusion when you become incapacitated or die.
Estate planning should be a priority in retirement.
It will help you to live more purposefully in your golden years while protecting your loved ones and your legacy.
If you need an estate plan or a review, request a consultation at our Harvest Law KC Overland Park estate planning office.
Your last will, trust, and beneficiary designations should be reviewed and updated to reflect current circumstances.
Advance directives and powers of attorney should be established to provide direction for incapacity planning.
If you fail to take required management distributions, you will be struck with steep penalties in addition to the taxes owed on the income from withdrawals.
Strategic planning is necessary to reduce your income tax and estate tax liabilities.
Because healthcare needs tend to increase in retirement, preparing for long-term care expenses is essential.
If you are retired and have not yet started your estate planning, do not delay.
This post is for informational purposes only and does not provide legal advice. You should contact an attorney for advice concerning any particular issue or problem. Nothing herein creates an attorney-client relationship between Harvest Law KC and the reader.
Reference: Vanguard “Estate Planning in Retirement”
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