Estate Planning for Retirees: 10 Tips to Secure Your Nest Egg

Retirement should be a time to enjoy the fruits of your years of hard work. You rightfully deserve to look forward to relaxing, spending time with family, and checking items off your bucket list. But before you can fully relax into your golden years, it’s essential to have a secure estate plan in place.

Marx Law Firm has seen firsthand the peace of mind that a thoughtful estate plan provides. Without proper estate planning, your nest egg, property, and even guardianship of minor children or grandchildren could be at risk. The good news is that estate planning doesn’t have to be complicated or expensive when you know what key steps to take.

1. Have an Up-to-Date Will

The first fundamental building block of an estate plan is having a current will – referred to in legal speak as the “last will and testament.” Yet, according to a recent survey, a startling 65% of U.S. adults do not have one.

And without this centerpiece document dictating your final wishes, the state steps in to determine how to disburse your assets and name guardians for any minor children. The outcome is seldom what you would have wanted for your loved ones.

Your will should:

• Designate beneficiaries to receive your property and assets
• Name an executor to oversee the carrying out of your wishes
• Name a guardian for minor children or grandchildren if needed.

We cannot stress enough the importance of reviewing beneficiaries across your estate once a year or after major life changes like retirement, marriage, divorce, and new grandchildren.

2. Consider Establishing Trusts

In addition to a will, we often recommend setting up trusts as part of an estate plan depending on your family dynamics and value of assets. The most common trusts created are:

• Revocable Living Trust: Allows you to place assets in trust while alive and serve as the trustee. The trust becomes irrevocable upon death.
• Bypass Trust: Created at death to allow assets to transfer, tax-free, to beneficiaries. this trust can protect assets if a beneficiary divorces, faces creditors or lawsuits, or dies.
• Special Needs Trust: Provides assets for loved ones with disabilities without impacting their government benefits.

Trusts often avoid the potentially lengthy and expensive probate process in Texas when structured properly. However, the laws and regulations surrounding trusts can be complex, which is why working with an experienced estate planning attorney is so important.

3. Review Retirement Accounts and Beneficiaries

Once you have a will and possible trusts established, the next step is to review beneficiaries on retirement accounts, including 401(k)s and Individual Retirement Accounts (IRA). For many retirees, these accounts comprise the majority of assets that will need to be transferred after death.

Whoever you designate as the retirement account beneficiary will receive the funds directly, bypassing the will or probate process. So your designated beneficiaries must be kept up to date following any major life events. You should review beneficiaries annually, at a minimum.

4. Life Insurance Policies and Beneficiaries

In addition to retirement accounts, carefully review your life insurance policy beneficiaries as part of your estate plan. There have been circumstances where a beneficiary was listed decades ago, only to find out the person died in recent years, or beneficiaries have been incorrectly listed in certain forms. Verify that your beneficiary designations align with your current wishes before shifting into retirement.

5. Consider Setting Up Transfer on Death Designations

Another way to avoid assets passing through probate is to set up a transfer-on-death designation (TOD) or a payable-on-death designation (POD). These designations allow you to name beneficiaries’ assets that transfer directly following your death, including:

• Bank accounts
• Investment accounts
• Vehicles
• Homes and land

TOD and POD accounts supersede what is written in your will regarding those specific assets. So, ensuring consistency across your estate plan is key.

6. That also Applies to Bank Accounts and Investments

Two common accounts we see used with TOD or POD designations are regular bank accounts, investment brokerage accounts, or stocks. Remember that whoever you list as the beneficiary on accounts with a TOD or POD will receive that asset directly, regardless of any designation in a will or trust. These accounts do not pass through probate first.

7. Determine Your Advance Medical Directives

No one likes to consider declining health or incapacitation, but having a legally binding, advanced medical directive in place can help to ensure any future medical care aligns with your values, priorities, and wishes if you cannot voice those decisions yourself.

Otherwise, in Texas, the healthcare practitioner will step in to make health determinations, along with their choice of family member.

Typically, advance care planning involves defining two key legal documents:

• Medical Power of Attorney (POA): Names someone you trust to make medical decisions if incapacitated.
• Living Will: Provides written direction on end-of-life medical treatments to doctors and hospitals.

By outlining your preferences in advance with these directives, you provide clear guidance in complex situations for loved ones and physicians struggling with tough medical choices.

8. Outline Long-term Care Preferences

In addition to end-of-life health decisions, your estate plan should address potential long-term care needs as you age. Will receiving care at home be a priority, or do you prefer assisted living or a nursing facility?

Outline not only your preferences for care but also guidance on resources to cover any associated expenses.

For reference, government services like Medicare typically only cover short-term skilled nursing services, not custodial long-term care. Discuss with your financial advisor what long-term care insurance or other assets could help fund potential care costs.

9. Review Your Estate Plan with Your Family

Once the legal documents for your estate plan are completed, we recommend you review copies with your family members, especially the ones who are involved. This increases transparency around your decisions and helps to avoid confusion down the line. Setting aligned expectations helps prevent those family disputes that are too often driven by unexpected decisions or behaviors.

Opening conversations with your spouse, children, or whomever you name in legal documents creates a shared understanding from the onset. As uncomfortable as death and money conversations can sometimes be, especially when combined, the payoff for aligned families is huge.

10. Set Aligned Expectations for Heirs

Estate plans that outline inheritances help prevent clashes over assets post-death. Marx Law Firm counsels clients on the best approaches to consider when determining how to distribute an inheritance equitably but fairly across heirs.

Setting expectations also means discussing responsibilities ahead of time, especially if you plan to name adult children as financial or healthcare agents. Confirm whomever you appoint fully understands the gravity of this important designation.

Seek Support From an Estate Planning Attorney

Every family’s retirement situation and desired estate plan will differ based on distinct sets of priorities, relationships, assets, and intentions. At Marx Law Firm, we customize plans specific to each client we work with.

Working collaboratively with retirement and estate planning professionals can minimize the risk of costly errors that could otherwise undermine your legacy. Consider Marx Law Firm as part of your estate planning support team. We can simplify this complicated topic so your family can benefit from the estate you’ve worked so hard to leave behind.

Contact us today to schedule a consultation and get started securing the future for those you love.