If you are considering retiring soon, it may be time to create or take another look at your estate plan. Things change as you age and leave your Connecticut job, and you want to ensure that you make appropriate adjustments.
Update your will
Find a copy of your most recent will and ensure that your wishes haven’t changed. Your marital status might not be the same, or perhaps you accumulated additional assets that you wish to bequeath to a specific person.
Check your beneficiaries
Another critical step in retirement estate planning is to check your life insurance policy and bank, brokerage and retirement accounts and add or change beneficiaries as needed. Every financial account should have one or more beneficiaries listed.
Protect your assets
If you have an estate worth more than $12.92 million, it is subject to both Connecticut and federal estate taxes. You can lower the value of your estate by forming an irrevocable living trust and transferring assets you don’t need into the account. When you do this, you create a directive stating how you wish the trustee to distribute the account’s contents when you pass, and you relinquish control of the funds to your named trustee. The assets no longer belong to your estate and cannot be claimed by creditors. These directives, once written, can only be changed by court order after your death.
Convert a traditional IRA to a Roth IRA
You fund a traditional IRA with pre-tax money. Withdrawals are taxable income, including those initiated by the beneficiaries. If you want to avoid passing on this tax burden, consider moving all or part of your funds to a Roth IRA. You will pay a tax when you transfer the funds from one account to the other, but later withdrawals are tax-free.
Plan for incapacitation
Hopefully, you’ve prepared documents clarifying how your executor should settle your estate. Now, you need to take a moment to consider what might happen if you become incapacitated and cannot act on your own behalf.
Power of attorney
A power of attorney grants someone the right to conduct financial transactions for you. This authority includes writing checks as well as buying and selling real estate.
A living will documents your end-of-life wishes. For example, if you are clinically brain-dead, you may specify that you do not wish to be kept alive with a ventilator.