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Relocating in Retirement? What You Need to Know before You Go

Moving in retirement is a big deal. Whether moving to be closer to family or trying to cut your living costs, moving in your sixties or seventies should only happen after much consideration and careful planning. A recent article, “Moving in Retirement? 5 Things to Ponder Before You Pack” from Nerd Wallet, explains the details.

Lower property taxes or income taxes are an attraction for many. However, look at all the costs to get a total picture, including the cost of living, estate taxes and housing costs, which have rocketed in many Sunshine states. You may find the difference is not as much as you thought. Suppose you’re selling a business before you leave. In that case, your current state may be more interested in recouping taxes than you think, so speak with an estate planning attorney to make the sale as tax efficient as possible.

One unexpected opportunity from moving outside of a Medicare Advantage’s service area is the chance to change your Medicare coverage. Relocating provides an acceptable reason to change a Medicare Advantage plan or sign up for original Medicare. It is also a time when you can sign up for Medigap coverage. You can normally only sign up for Medigap during open enrollment, a six-month period after you turn 65, and when you have Medicare Part B. This coverage is difficult to buy later in life if you have health issues.

Don’t forget to notify your insurance companies and Social Security if you move.

Could you rent first? If you’re moving to a place where you’ve summered for twenty years, renting for the first year is best. The winters may not be as bucolic as the summer. If you have to sell a house quickly after a short period, it could be a costly mistake. You’ll also own capital gains taxes on any profit made on a home sale if you move after living in a new location for less than two years.

What level of healthcare services do you need now or might need in the future? Healthcare becomes more critical as we age, especially if we are living with a chronic condition. If services are not the same quality or are a day’s drive away, your move could lead to bad health outcomes and added stress.

Estate law is state-specific.  If so, your estate planning documents—last will and testament, power of attorney, health care power of attorney, living will, trusts and other documents—may not be considered valid by the courts in your new state. Consult with an estate planning attorney about what needs to be changed to be sure that your estate plan will give you the same results in your intended new state.

Will you enjoy your daily life in your new location? Retirees active in social activities, from sports to community theater to volunteer work, report enjoying their retirement. Will you be living with people who share your interests and values? Will you feel comfortable if your political views differ from those around you?

One last point: transportation doesn’t usually feel like an issue until it is. If your children live on the West Coast and you’re considering moving to a small New England town, will the added cost make frequent visits prohibitive? If your retirement agenda includes a lot of international travel, you may want to consider how living far from an airport will impact your travel plans.

Reference: Nerd Wallet (Aug. 5, 2024) “Moving in Retirement? 5 Things to Ponder Before You Pack”

Is It Common for Siblings to Fight Over Inheritance?

Unfortunately, siblings refusing to speak with other siblings about their late parent’s estate matters is a fairly common occurrence. A recent article from Morningstar, “My brother won’t tell me anything about our mother’s $1.6 million estate. Can I remove him as trustee?” provides a good example of how things can go wrong.

According to a letter to the publication from one brother, a mother was the second to die and the brother who knows about her will has not yet filed the will with the court. To make matters more complicated, he explains that the father had created a trust before he died in 2000, which was never funded. Medicaid paid for $150,000 in nursing home costs, and at the time of her death, the mother owned a 1.6-million-dollar property.

While the best resolution is almost always simply to have a direct conversation, this doesn’t seem likely to occur in this situation. The controlling brother may be doing precisely what is necessary. However, since the brother won’t tell the other brother what is happening, the only way forward may be to go to court.

If a trust was created, it’s entirely possible it was a Medicaid Asset Protection Trust (MAPT). This trust is created to remove assets from being countable for Medicaid purposes. If the trust wasn’t funded, the $1.6 million property may never have been retitled and placed in the trust. This is the second most common estate planning mistake seen by estate planning attorneys; the first is not having an estate plan.

If the trust was never funded, the family home is considered an asset by Medicaid and could be “clawed back” by Medicaid to cover the medical expenses. If the $150,000 were the father’s nursing home costs, the father’s estate would have owned this amount, which should have taken place after the father’s estate was settled. There is a statute of limitations, however, and depending on the rules of the father’s state, this may be a moot point.

Since the house was the primary residence of a well-spouse, it may not have been countable for Medicaid. If the father had no other assets, there may be no debt to Medicaid. It’s entirely possible all this was dealt with. However, the brother wasn’t told the details.

This leaves the question of what the brother is doing with the mother’s estate. If no will has been filed, it might be because the estate plan was designed to avoid probate. Assets held in trusts and passed through beneficiary designations don’t go through probate. If the house was placed in a trust, it would not go through probate either.

However, since the sibling is an heir, he has the right to an accounting report or a report from the brother as the trustee and executor. The report should contain information on how assets were owned, and distributions were made.

This is a lesson for parents who know their children don’t get along. If they don’t get along while you are living, don’t expect this to change after your death. If one is given power of attorney, serves as a trustee and executor, and the others are left out of any decision-making, your estate may shrink because of litigation, and the family may fracture. Talk with your estate planning attorney about naming a neutral person for all or some of these roles to avoid adding the stress of an estate battle to your family’s grief.

Reference: Morningstar (Aug. 3, 2024) “My brother won’t tell me anything about our mother’s $1.6 million estate. Can I remove him as trustee?”

Increase in Estate Planning for Gen-Z

A recent study by Trust & Will highlighted that Gen Z is leading in setting up their estates and wills. Despite their young age, they are more curious and engaged in planning their financial futures than any other generation. Financial planner Jack Heintzelman from Boston Wealth Strategies notes, “They want to set themselves up for success and have flexibility in their lives, not just work until retirement.”

What Drives Their Early Planning?

Living through significant global events like 9/11, the 2008 financial crisis and the COVID-19 pandemic has influenced Gen Z’s mindset. These experiences have made them more pragmatic and forward-thinking. Their tech-savviness and access to vast amounts of information online also enable them to make informed financial decisions. They have witnessed economic instability and recognize the value of planning ahead.

How are Financial Advisors Responding?

Financial advisors are noticing this trend and adapting their strategies. In an article by Investment News, Paul Schatz of Heritage Capital mentions that younger clients are more approachable and agreeable regarding estate planning. Kelly Regan from Girard, a Univest Wealth Division, adds that the upcoming wealth transfer makes Gen Z a crucial demographic for advisors. Advisors are now focusing on educating and engaging Gen Z clients, offering tailored advice that resonates with their unique financial goals and values.

What Estate Planning Documents Do You Need?

Mandy Ritter, a senior wealth planning specialist at Captrust, emphasizes the importance of having key documents in place. These include a last will and testament, a financial durable power of attorney, a health care power of attorney, a living will and HIPAA authorization. These documents ensure that Gen Zers have control over their financial and medical decisions, even if they become incapacitated.

Digital Assets and Estate Planning

In today’s digital age, it’s essential to consider digital assets in estate planning. Advisors should ensure that clients have online accounts and digital presence plans. This includes providing executors with access to passwords and digital asset instructions. Managing digital legacies has become increasingly important as more of our lives and assets exist online.

Can Advisors Connect with Gen Z?

Advisors need to listen to their goals and visions to connect with Gen Z effectively. Jack Heintzelman advises,

 “Don’t lead with products or solutions. Listen to what their goals are and how they feel about money. Meet them where they are, and they will take your advice seriously.”

Building trust and rapport with this generation requires understanding their unique perspectives and providing guidance that aligns with their values and long-term aspirations.

Ready to Secure Your Future?

Gen Z is setting an example by taking control of their financial futures early. If you want to ensure that your loved ones are protected, and your assets are managed according to your wishes, it’s time to start planning. Early estate planning can offer peace of mind and a sense of security, knowing you have a clear plan.

Key Takeaways

  • Early Financial Security: Gen Zers are securing their financial futures at a young age, ensuring stability and control.
  • Influence of Global Events: Exposure to significant events has made them more pragmatic and forward-thinking about financial planning.
  • Tech-Savvy Decisions: Their comfort with technology allows them to effectively access and utilize financial planning tools.
  • Entrepreneurial Spirit: Many Gen Zers are entrepreneurs, and estate planning helps protect their business interests.
  • Comprehensive Planning: Including digital assets in their estate plans ensures complete and organized future management.

References: Investment News (Jan. 5, 2024) “The younger, the better: Gen Zers are ready for estate planning” and Trust & Will “Millennials and Estate Planning: Trust & Will’s Annual Report [Updated 2024]”

How Estate Planning Prepares for Unexpected Medical Events

Estate planning is more than the distribution of property after a person dies—in fact, a large part of an estate planning attorney’s practice concerns helping people prepare for unexpected medical issues. A recent article from Merrill Foto News, “Know Your Legal Rights: Advance Care Planning Paves The Way For Future Medical Decisions,” explains what steps should be taken.

Anyone over 18 should have certain advance care plan documents in place, although these documents become even more critical as one reaches their later years. People who have been admitted to the hospital for emergency care, treatment for illness, or surgery all need someone else to speak with medical personnel on their behalf.

Having an Advance Directive, which is also known as Health Care Power of Attorney in some states, is necessary for another person to be able to be involved with your medical care. The healthcare law has become very restrictive, and simply being a person’s spouse or child may not be enough to allow you to make critical decisions on their behalf.

It’s best to name two people as your health care power of attorney—a primary and a backup in case the primary is unable or unwilling to act. If you and your spouse are both in a car accident, for instance, you’ll need someone else to advocate for both of you.

Who to name as your agent depends upon your situation. If your adult children live nearby, one of them may be the best choice if they can be counted on to follow your wishes. If no family is nearby, naming a trusted friend may work, unless you and the friend are both elderly. What would happen if your friend predeceased you or was unable to come to the hospital in the middle of the night? Your estate planning attorney can discuss your situation and help you determine the best candidates.

While many fill-in-the-blank Health Care Power of Attorney documents are available, it’s best to have one prepared by an estate planning attorney to reflect your wishes.

Your feelings about artificial life support also may have changed. Before COVID, people often said they didn’t want to be put on a respirator. However, respirators now save lives. Your wishes to be kept alive in the presence of different kinds of medical evidence may have changed from ten years ago. What if your heart is still working and a brain scan shows evidence of mental activities? Progress in medicine has led to more complex questions and answers about patients’ prognoses; you want a healthcare power of attorney document to reflect your wishes, given advances in medicine today.

Your feelings about healthcare decisions may have changed over time, so healthcare directives and an estate plan should be updated similarly to reflect changes in your life and circumstances.

Reference: Merrill Foto News (July 25, 2024) “Know Your Legal Rights: Advance Care Planning Paves The Way For Future Medical Decisions”

Well-Played: Country Legend Toby Keith’s Legacy Protected for His Family

Toby Keith, the famous country singer, passed away at the age of 62 after battling stomach cancer. Despite his illness, he ensured that his estate was in order before his death. In a story shared by InTouchWeekly and Survivornet, his widow, Tricia Covel, filed to be named the administrator of his estate shortly after his passing. Keith’s estate planning included a revocable living trust meant to ensure his family’s privacy and financial security.

Why Should You Plan Your Estate Early?

Planning your estate early helps reduce stress on your family during an already emotional time. When someone passes away, emotions run high, and conflicts can arise. Having a clear plan makes it easier for your family to follow your wishes without added stress or uncertainty.

What are the Key Documents in Estate Planning?

There are several critical documents to consider when planning your estate, especially if you are dealing with a serious illness like Toby Keith did:

  • Power of Attorney: This allows someone you trust to make legal, tax and financial decisions for you if you cannot do so.
  • Health Care Proxy: This person will make health-related decisions on your behalf.
  • HIPAA Release: This lets someone access your medical information and speak to your doctors.
  • Physician Order for Life-Sustaining Treatment (POLST): This outlines your wishes for life support.
  • Beneficiary Designation: This document names the beneficiaries of your life insurance and retirement assets.
  • Living Will: This states your health care wishes.
  • Will: This specifies how you want your assets distributed.

How Did Toby Keith Use a Revocable Living Trust?

Toby Keith’s estate planning included a revocable living trust. A revocable living trust is a legal document that places your assets into a trust while you’re alive and allows you to make changes as needed. After your death, the trust becomes irrevocable, meaning it can’t be altered. This type of trust helps avoid probate court, making the process smoother and quicker for your family.

Should You Consider a Trust?

A revocable living trust might be a good option if you have significant assets, such as property or investments. Trusts offer more control over how your assets are distributed and can help avoid lengthy probate processes. Toby Keith’s trust ensured that his family could manage his estate privately and securely without the public scrutiny of a probate court.

What can You Learn from Toby Keith’s Trust?

Toby Keith’s careful planning illustrates the importance of addressing your estate needs early, especially when facing a serious illness. He documented his wishes and ensured they were legally binding, providing his family with clear instructions and avoiding potential disputes. Keith protected his legacy and provided for his family’s future by taking these steps.

How can You Start Planning Your Estate?

Starting your estate planning might seem overwhelming. However, protecting your loved ones and your legacy is essential. Here are a few steps to get started:

  • Make a List of Your Assets: Include everything from bank accounts to property.
  • Decide on Your Beneficiaries: Think about who you want to inherit your assets.
  • Choose Your Representatives: Select people you trust to act on your behalf, such as a power of attorney, health care proxy and executor.
  • Consult with an Estate Planning Attorney: An attorney can help you navigate the legal requirements and ensure that your documents are in order.

Take Inspiration From Toby Keith’s Trust and Secure Your Legacy

Contact our law firm today to schedule a consultation and learn more about how a revocable living trust and other estate planning tools can protect your family’s future. By taking action now, you can ensure that your wishes are honored and provide peace of mind for yourself and your loved ones.

Key Takeaways

  • Early Planning Reduces Stress: Addressing estate planning early can ease emotional and financial burdens on your family.
  • Essential Documents: Key documents include a power of attorney, health care proxy, living will and revocable living trust.
  • Privacy and Control: A revocable living trust helps maintain privacy and avoids the public process of probate court.
  • Toby Keith’s Example: Toby Keith’s thorough planning ensured his family’s security and upheld his wishes.
  • Professional Guidance: Consulting with an estate planning attorney is crucial for navigating legal complexities and securing your legacy.

References: InTouchWeekly (July 9, 2024) “Toby Keith Drafted Will for $400 Million Fortune Amid Cancer Battle | In Touch Weekly” and Survivornet (July 15, 2024) “Distributing Fortune & Legacy: Late Country Star Toby Keith’s Estate and the Sensitive Issue of Planning Your Will as a Patient”

Seniors Cannot Be Careful Enough About Internet Scammers

The biggest threat to retirement accounts today isn’t a market downturn. It’s thieves who have become highly sophisticated in technology and human nature.

A recent article from The New York Times, “How One Man Lost $740,000 to Scammers Targeting This Retirement Savings,” tells how a 76-year-old retired attorney was duped into thinking he was helping an active government investigation when he was actually being scammed out of almost all of his retirement savings accounts. This man was one of many who were drawn into complex plots so intricate they could be used for crime novels.

Scammers are especially adept at using human vulnerabilities against their victims. Romance scams are more common. However, so are impersonators who purport to be law enforcement officials or technical support team members. They use basic psychological tactics to get victims to act, isolate them from friends or family who might be suspicious and present an opportunity to do good for others by helping in the so-called “investigation” or preying on our basic desire to connect and be liked by others.

In 2023, cybercrime theft was more than $12.5 billion, an increase of 22% from 2022 and more than three times the levels in 2019. These are just the crimes known to the FBI—countless others go unreported.

Seniors over 60 are targeted because they are seen as having savings worth pursuing. In 2023, seniors lost more than $3.4 billion to cybercrime.

For the retired attorney, it started when he had trouble logging into a 401(k) account. When he got in a few days later, the screen changed abruptly, and he was instructed to call the fraud department. There was a phone number on the screen. He was connected with his first scammer. Lesson one: If you’re having trouble logging into an account, close the window and find a phone number in a paper document or statement.

The man said he was a fraud investigator, and his money was vulnerable. The scammer built credibility by knowing the victim’s name and where all of his accounts were. This scammer connected him to another man, who claimed to be from the bank. A third man alleged to be from the IRS was on the phone. He provided his badge number to establish further credibility. They told their victim he had an opportunity to be part of their investigation. He was told not to disclose the investigation to anyone, including his three adult children.

A lengthy series of machinations began, with the victim giving the so-called investigators access to his accounts and transferring assets as the thieves kept up friendly banter about how the investigation was going. They told him one of their targets had been caught by Interpol and another was being tracked in Singapore.

The thieves guided him through many transactions, including moving money from an IRA to another bank because the bank had declined to release a large amount of funds, being wary of fraud. The thieves responded by saying the advisor was on their watch list, making their victim suspect the one person who was trying to look out for him.

The man only learned he was a scam victim when a real detective found his name and address on a paper receipt for gold in a car. He was one of at least seven people pulled into a scheme based in India. Making matters worse, his withdrawals created a tax bill: $285,000 in federal and state income taxes, which he cannot pay.

Awareness and a healthy skepticism should be part of every senior’s survival skill set. If someone promises involvement in a scheme or requests money, contact a trusted adult child, your estate planning attorney, or even the local police department to be sure you are not being scammed.

Reference: The New York Times (July 29, 2024) “How One Man Lost $740,000 to Scammers Targeting This Retirement Savings”

What Is the Difference Between Dementia and Alzheimer’s?

Dementia is a serious and growing health concern affecting over 55 million people around the world. However, many mistakenly conflate the condition with Alzheimer’s Disease. Care highlights the differences between the two conditions and the importance of understanding them.

What Is Dementia?

Dementia describes a decline in cognitive function and mental ability severe enough to interfere with daily life. Memory loss is a common symptom. However, dementia can also impact reasoning, comprehension, language and spatial awareness. Different types of dementia have distinct symptoms and causes.

What Is Alzheimer’s Disease?

Alzheimer’s disease is a progressive brain disorder that primarily affects memory. It often starts with short-term memory loss, such as forgetting conversations, misplacing items and repeating oneself. As the disease progresses, it can also impact:

  • Language skills
  • Visual perception
  • Driving skills
  • Ability to manage finances or use technology

What are Other Forms of Dementia?

Besides Alzheimer’s disease, there are several other common types of dementia, each with unique symptoms and causes. Understanding these different types helps in recognizing symptoms and seeking appropriate care.

Lewy Body Dementia (LBD)

Lewy Body Dementia affects thinking, reasoning and processing information. It often presents with hallucinations and behavioral issues. People with LBD may experience agitation, memory problems and symptoms like Parkinson’s disease, such as tremors and slow movements.

Vascular Dementia

Vascular dementia is caused by reduced blood flow to the brain, often due to a stroke or chronic illness. Symptoms can include confusion, slowed thinking, difficulty concentrating and problems with organization. The symptoms vary depending on the location of the blocked or damaged blood vessels.

Frontotemporal Dementia (FTD)

Frontotemporal Dementia affects the frontal and temporal lobes of the brain, which control personality, language and movement. Symptoms can include changes in personality, behavior, language difficulties, memory loss and confusion.

How Is Dementia Diagnosed?

There isn’t a single test for dementia. Doctors instead use various sources of information, including patient history, family observations and physical exams, to determine the type of dementia. Cognitive testing and MRIs may also assess memory, attention, language and other cognitive abilities.

The Importance of Early Planning

The sooner someone facing a dementia diagnosis begins planning for their future care and financial decisions, the better for their loved ones. This planning involves discussing the person’s wishes and preparing legal documents.

“Have the conversation,” says Martha Mannix, a clinical associate professor of law at the University of Pittsburgh Law School. In an article by Tribdem, she emphasizes the importance of discussing who the person wants to be with, how they want to spend their time and putting themselves in the person’s shoes.

How Powers of Attorney and Advance Healthcare Directives Can Help

Legal documents, like advance healthcare directives and financial power of attorney, are indispensable to protecting yourself against dementia. These documents ensure that power over your finances and healthcare lies with your family, not a court-appointed guardian. Establish a financial power of attorney, a healthcare power of attorney and an advance healthcare directive to control your end-of-life care, emergency healthcare and finances.

Start Planning for Alzheimer’s and Dementia Today

If you or a loved one faces a dementia diagnosis, a good estate plan makes all the difference. Contact our law firm today to schedule a consultation and learn how estate planning can support you and your family in the face of cognitive decline.

Key Takeaways

  • Understanding Dementia: Dementia is a decline in cognitive function severe enough to interfere with daily life, encompassing various symptoms beyond memory loss.
  • Alzheimer’s Disease: The most common form of dementia, primarily affecting short-term memory and progressively impairing cognitive functions.
  • Different Types of Dementia: Lewy Body Dementia, Vascular Dementia and Frontotemporal Dementia each have distinct causes and symptoms, requiring unique approaches to care and treatment.
  • Have Essential Conversations: Discussing wishes and preparing legal documents, like advance healthcare directives and financial power of attorney, ensures that an individual’s preferences are respected.

References: Care (Jan. 7, 2022) “Understanding the difference between dementia and Alzheimer’s: What experts say you need to know” and Tribdem (Jul. 29, 2023) “Dealing with dementia | Planning ahead: ‘Have the conversation’ | News | tribdem.com”

Godparents Lack Legal Rights If Not Named as Guardians for Minor Children

Choosing godparents for your children is an important decision for many families. However, it’s crucial to understand that godparents do not have any legal rights, unless you name them guardians in your will. If you’d like your children’s godparents to serve as guardians in an emergency, consider if they’re suitable for the responsibility and take the legal steps needed to recognize them as guardians.

What Is the Difference between a Godparent and a Guardian?

Parents often choose godparents to have a religious or spiritual influence on their children. They are typically involved in special ceremonies, such as baptisms, and may play a supportive role in their children’s upbringing. However, being a godparent does not grant any legal rights or responsibilities over the child.

 

On the other hand, a guardian is legally responsible for the care and upbringing of a minor child if the parents pass away or are unable to care for them. According to Forbes, guardianship is a significant legal role that includes making decisions about the child’s education, healthcare and general welfare.

Why Can’t Godparents Automatically become Guardians?

The main reason godparents cannot automatically become guardians is that the roles are different in nature and responsibility. While godparents are chosen for their moral and spiritual guidance, guardians are chosen to take on the full parental role in case of an emergency. While there is overlap between these roles, a capable spiritual guide will not always have the time and resources to become a parent.

What Should You Consider when Choosing a Guardian?

Choosing a guardian for your children is a complex and often emotional decision. Here are some key factors to consider:

Lifestyle Fit

Think about the potential guardian’s age and life situation. Asking someone to raise your children is a big request, and choosing someone whose lifestyle can accommodate this responsibility is essential. For example, a guardian with grown children might face a significant lifestyle adjustment if asked to care for young children again.

Location

Ideally, the guardian should live near your home. This minimizes the disruption to your child’s life, allowing them to stay in the same school and community, which can be a source of comfort during a difficult time.

Financial Circumstances

Raising children can be expensive. Make sure that the potential guardian is financially stable, and consider setting up a trust to cover your child’s expenses. This will help avoid placing a financial burden on the guardian and ensure that your child has the resources they need.

Shared Values

Choose a guardian who shares your values and parenting philosophy. While no one will be a perfect match, it’s important that the guardian can provide a similar upbringing to what you would have wanted for your child.

Should You Name a Single Guardian or a Couple?

While many consider naming a married couple as co-guardians, it’s often simpler to name a single individual. This helps avoid complications if the couple divorces or disagrees about how to care for your child. You can also name one or more successor guardians who will take over if the primary guardian is unable or unwilling to take on the role when the time comes.

Is It Important to Get the Guardian’s Permission?

Always ask the person you want to name as guardian if they are willing to accept the role. This way, you can be sure they’re prepared and willing to take on the responsibility. Naming someone without their consent can lead to confusion and complications.

How to Name a Guardian in Your Will

In most states, you must include this information in your will to legally name a guardian for your minor children. This is a critical step to ensure that your wishes are followed and to avoid leaving the decision up to the courts.

What Happens If You Don’t Name a Guardian?

If you don’t name a guardian in your will, the courts will decide who will take care of your children. This can lead to family disputes and result in a decision that may not align with your wishes. Naming a guardian in your will gives you control over who will care for your children and helps stabilize them during a challenging time.

Request a Consultation to Name Guardians for Minor Children

Choosing a guardian for your children is one of the most important decisions you will make as a parent. Contact our law firm today to learn more about how to name a guardian in your will and to start creating a comprehensive estate plan. We can help you secure your child’s future by finding the right person to care for them if you ever can’t.

Reference: Forbes (May 29, 2018) “Selecting Your Children’s Guardians Is Very Different Than Naming Their Godparents”

Role of Estate Planning for the Great Wealth Transfer

The “Great Wealth Transfer” refers to the significant shift of wealth expected to occur over the next decade. According to a recent report by Altrata, individuals with a net worth of over $5 million are set to pass on nearly $31 trillion to the next generation. This monumental transfer of wealth will impact various sectors, including family offices, financial services, luxury goods and nonprofits.

What Is the Importance of Estate Planning to the Great Wealth Transfer?

Estate planning is essential to ensure that your wealth is transferred according to your wishes. Your assets could be subject to legal disputes, taxes and other complications without a proper plan. Estate planning provides clarity and security for your loved ones, helping to preserve and protect your legacy.

Who Benefits from the Great Wealth Transfer?

While the media often focuses on Millennials and Gen Z, the Altrata report highlights that Generation X is first in line to inherit. Now in their mid-to-late 40s, these individuals are set to receive significant inheritances from their wealthy parents. Younger generations, including Millennials and Gen Z, are more likely to inherit from grandparents, typically resulting in smaller sums.

What Challenges Do Wealthy Families Face?

Wealthy families face unique challenges during the wealth transfer process. Some of these include:

  • Succession Planning: As families become more globalized, succession planning grows more complex. It’s crucial to have advisors who understand international laws and regulations.
  • Generational Differences: There can be a disparity between the values and aspirations of wealth holders and their younger benefactors. Clear communication and planning can bridge this gap.
  • Early Transfers: Wealth is increasingly being passed on during the lifetime of the head of the family. This requires early engagement and preparation to manage assets effectively.

Can Estate Planning Help?

Estate planning can address these challenges by providing a structured approach to wealth transfer. Here are some key benefits:

  • Minimize Taxes: Proper planning can help minimize estate taxes, ensuring that more wealth is passed on to your heirs.
  • Avoid Legal Disputes: Clear documentation of your wishes can prevent legal battles among family members.
  • Protect Beneficiaries: Estate planning can protect beneficiaries from potential creditors and other financial risks.

Key Estate Planning Steps to Take

First, consult an estate planning attorney to create a comprehensive plan tailored to your needs. Review your assets, including properties, investments and personal belongings. Set clear goals for how you want your assets distributed and who will manage them. Finally, update your estate plan regularly to ensure that it remains relevant as your life changes.

Take Control of Your Legacy Today

The Great Wealth Transfer is a significant event affecting millions of families and the US economy. If your family will be part of this wealth transfer, understand that proper estate planning is a must to reduce your tax burden and see your wishes go into effect.

If you haven’t developed an estate plan, now is the time. Contact our law firm to schedule a consultation and learn more about creating a plan that protects your wealth and provides for your loved ones.

Key Takeaways

  • Secure Your Legacy: Ensure that your wealth is transferred according to your wishes.
  • Minimize Taxes: Proper planning can reduce estate taxes, preserving more for your heirs.
  • Avoid Disputes: Clear documentation helps prevent legal battles among family members.
  • Adapt to Changes: Regularly update your plan to reflect life changes.

Reference: Altrata (Jun. 11, 2024) “Family Wealth Transfer 2024”

Money Tips for Taxes at Different Stages of Retirement

There are different stages of retirement, just as there are different stages of any portion of life. Each stage has its own challenges and needs, nearly all of which can be addressed by planning in advance. A recent Forbes article, “Tax-Saving Strategies For Three Stages Of Retirement,” describes the different stages and their requirements.

Pre-retirement is age 50-64. This is when you’re entering your final years of work and getting financial retirement and estate plans in order. The most critical tasks:

Make the most of retirement plan opportunities, including maxing out contributions to any employer-sponsored plans, especially those with matching features.

After age 50, wage earners qualify for catch-up contributions to IRAs and 401(k) plans. In 2024, a 50-year-old can contribute an additional $7,5000 to a 401(k) and $1,000 more to an IRA.

This is the time to review your Social Security benefits. While you can take benefits any time after age 62, by waiting until your Full Retirement Age (FRA) or later, your monthly benefit will grow. This is a personal decision, as some people need to take Social Security earlier, while others can draw income from retirement accounts until they reach age 70.

Active retirement is considered ages 65-74. The focus here is wrapping up your working life and ensuring that you have enough money to support your lifestyle. The factors to focus on:

Required Minimum Distributions (RMDs) are the least amount of money you can take from your retirement accounts. The SECURE Act 2.0 extended the time you have to leave money in these accounts. However, you’ll need to take your RMDs strategically so you don’t get pushed into a higher tax bracket.

After age 70 ½, you can make Qualified Charitable Distributions (QCDs) directly from your IRA to any qualified charitable organization. You may donate as much as $100,000 per year if it is a direct donation from the IRA to the organization. For people who will make donations with or without tax benefits, this allows you to make your donations, reduce taxable income and leave a legacy while still living.

Late retirement is anything after age 74, where you may want to focus your attention on passing wealth to heirs. You should have an estate plan in place by now. However, it probably needs to be reviewed. Have any of your beneficiaries passed away? Is the person you named as your executor still willing to perform the tasks? Review your estate plan with your estate planning attorney to ensure that it complies with your state’s laws and wishes.

If you’re concerned about estate taxes, this is the time to use the annual gift tax exclusion to transfer wealth to heirs with no tax liability. In 2024, you may gift $18,000 to as many people as you want as a single, while married couples may gift $36,000 to as many people as they wish.

Reference: Forbes (July 12, 2024) “Tax-Saving Strategies For Three Stages Of Retirement”

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