Structuring your estate is a very important part of retirement planning. After all, you want to make sure that your legacy and final wishes are carried out, and that your loved ones are provided for in the most tax-advantaged manner possible. Thoughtful estate planning is critical when it comes to minimizing taxation during wealth transfer.
Wills and Trusts
A qualified financial advisor will work closely with your attorney to put the right documents in place to achieve your goals and create an estate plan to take advantage of federal and state estate tax laws.
You may find that you need to create a Dynasty Trust to avoid the generation-skipping tax that could otherwise adversely affect your grandchildren’s inheritance from you. Dynasty Trusts are designed to last for several generations, and to stay with the bloodline in case of divorce. They are often used to help grandchildren with tuition, books and other college expenses.
Other Wills and Trusts might help you shelter your estate by using language that creates a decedent’s trust, allowing last-to-die exclusions that can save thousands of dollars for your family and heirs.
How Much Money Should You Leave?
It’s important not to sacrifice your own retirement money during your lifetime, but instead work with a retirement planning expert to design a retirement income and distribution plan that will last as long as you do. Once you know that, you will be taken care of for the rest of your life, and you can look into the most tax-advantaged way to provide for your heirs.
Depending on the tax laws in your state, you may find it beneficial to spend part of your estate to actually save your heirs money on estate taxes! This can seem counterintuitive, that’s why it is very important to do your research with a qualified financial team.
Learn more about the importance of estate planning and retirement planning by clicking on these links:
Read transcript: Problems in Retirement – Part 2
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