5 Reasons You Should Manage Your Estate Before Retirement

This year, estate and legacy planning will be more important than ever because of changes to inheritance rules and tax laws that went into effect last year and other changes that could be coming. The good news is that many people are not likely to see their income taxes raised for the foreseeable future. 

It’s a common misconception that only the ultra-wealthy should have an estate plan. Actually, anyone – regardless of age, marital status or net worth – should create an estate plan. Effective estate planning can help you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and help ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.

Here are 5 reasons why you should manage your estate before retirement: 

Avoiding Probate

Without a plan, your estate can be subject to delays, excess fees and your assets become a matter of public record. A probate then takes place, which is the process of placing value on your assets, paying final bills and taxes and distributing the rest to beneficiaries. This can be a long, daunting process and painful process, which is why many decide to create an estate plan to avoid a probate at all costs. 

Help to Reduce Taxes 

You can have significant losses in your estate to payment of the state, federal estate taxes or state inheritance taxes without an estate plan. Even minimal planning can help reduce or possibly eliminate estate taxes altogether through AB or ABC Trusts. A variety of advanced estate planning techniques can also be used to help decrease estate or inheritance tax bills. 

Preserving the Interests of Beneficiaries 

One of the main reasons individuals put together an estate plan is to help protect their beneficiaries. If the beneficiary is an adult, an estate plan can help protect from bad decisions, outside influences, creditor problems and divorcing spouses. If the beneficiary is a minor, the law then requires a guardian or conservator to be appointed to oversee the minor’s needs and finances until they become an adult. It’s beneficial to designate a guardian and trustee for minor beneficiaries in advance to better prevent potential family discord. 

Preserving Assets 

Preserving assets is another significant reason for managing your estate. A sound financial plan, coupled with a comprehensive estate plan may help protect your assets for the benefit of both you during your lifetime and your beneficiaries after. You can also gain asset preservation for your spouse through AB or ABC Trusts and for your beneficiaries through lifetime trusts. 

Avoiding Conflict 

Oftentimes, there can be family conflict if it isn’t specified who gets/is in charge of what after the incapacitation or death of another family member. An estate plan can stop any potential fights because you choose who controls your finances and assets, helping to ensure that everything is handled in the way you intended. 

Start Managing Your Estate with an Advisor 

Many people think they’re too young to begin managing their estate, but the sooner you start, the better. If you want your assets and beneficiaries better cared-for, as well as peace of mind, an effective estate plan is essential. One of the best ways to help ensure this is through planning with a professional. At Johnson Wealth and Income Management, we offer custom services to help you get the most from your retirement. 

Contact us today to learn more.


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