Advice from an estate planning attorney

Estate Planning for the Soon to Be Retired

by Gary Foreman


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Estate planning always seemed like a topic for your parents, but now that your kids are grown and you'll soon be retired, it's time to think about putting your own estate plan together.

To help us explore what you need to consider in an estate plan we spoke with Marcia Wagner. She's an experienced estate planning attorney and founded the Wagner Law Group in 1996. The group doesn't provide investment advice, but rather focuses on estate planning, ERISA, and human resources law issues.

Q. What are the most important estate planning questions that soon to be retired people need to answer?

Ms. Wagner: Retirement is by any reasonable standards a major life cycle event. Thus, planning for retirement should include a review of one's estate plan. Whether changes are necessary depends of course upon individual facts and circumstances. And depending in part on how much time has elapsed since the last review, facts and circumstances may have changed significantly. Thus, revisiting the basic questions is important: "Who are my beneficiaries? In what manner (outright or in trust) should their inheritance be structured? Are beneficiary designations of non-testamentary assets (such as retirement plans) current? Given the very significant and numerous changes in the tax laws over the last several years, should tax issues be addressed? To whom shall I entrust the administration of my estate, such as executors, trustees, etc.? Are documents such as a durable power of attorney and health care proxy current?"

Q. Should you tell potential heirs about your estate plan?

Ms. Wagner: As a general rule, yes. Certainly exceptions exist, and each family's circumstances should be addressed. But absent special circumstances, discussing the estate plan with family members is helpful and very often will avoid post-death conflicts that might otherwise arise if certain members are not convinced that documents reflect actual intent. ("I don't care what the Will says, I know Mom wanted me to have her engagement ring.")


Q. Does retirement make any real difference in your estate plan? For instance, what impact does losing employer paid life insurance make?

Ms. Wagner: Retirement from employment may and very often does bring about significant changes in one's financial circumstances. From an income standpoint, employment related compensation will be replaced by retirement benefits and accumulated savings. Employer-provided health insurance may no longer be available. Term life insurance provided through employment will likely terminate. Even personally owned term insurance may be too costly to continue. Thus, while we function as legal rather than financial advisors, we do recognize the importance of a review of one's financial circumstances and the need for understanding how one's financial life will be different in post-retirement years. (The "golden years" are not so gold if the gold is lacking.)

Q. With people living into their 80s and 90s, should you expect to have to revise your estate plan?

Ms. Wagner: Hard to generalize, because individual situations differ so greatly. But regardless of age, we recommend that at least every five years, a client review his or her estate plan simply to determine whether any changes are necessary. In our view, the need for periodic review and possible updating increases rather than diminishes in post-retirement years.

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Q. We all hate to face our mortality. Why is it important for people in their 50s and 60s to have an estate plan?

Ms. Wagner: Estate planning is generally defined as the process by which one arranges an appropriate disposition of his or her net worth to desired beneficiaries without incurring unnecessarily high transfer taxes. Thus, estate planning is important for anyone who has accumulated net worth. It's also important for anyone with young children, regardless of financial circumstances. Young adults, for example, may have little need for sophisticated tax planning, but considerable need for appropriate documentation to designate a guardian for their kids. People in their 50s and 60s (once considered by yours truly to be "ancient," but now "kids") are no different.

Retirement is a milestone in your life. It's truly a change in direction. With any major lifestyle change, it's important to make sure that important aspects line up properly. Among those is your estate plan.


Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.

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