Being retired from your job doesn’t mean you’re done with responsibilities. Now is the time to review your estate plan, if you haven’t done so in the last few years. If you don’t have an estate plan, it’s time to get started—immediately, if not sooner.
Even after you’ve completed a lifetime of hard work, saving and planning for retirement, an article in The Almanac, “Five mistakes to avoid when planning your estate,” says there are still some big decisions to be made, and that includes estate planning.
You want to be certain that your assets will be distributed exactly the way you want, to the people or organizations you want, and that the government won’t take any more than is necessary. To help with this task, here are some of the top estate planning mistakes you need to avoid.
No estate plan at all. You at least need a last will, financial power of attorney, and health care directive. These should be updated with any major life event. You might also look at a trust that will govern how your assets will be managed for your beneficiaries. If you have no estate plan, the state will default your assets to your spouse or closest blood relatives. This may not be what you really wanted, and it can be time consuming, costly and result in large tax liabilities.
Not updating beneficiaries or listing contingent beneficiaries. All of your IRAs, 401(k)s, annuities, and life insurance policies should accurately designate the person or persons you want to receive the proceeds.
Investing lifestyle and legacy assets in the same way. There are plenty of retirees who spend well below their means and can live comfortably on a much smaller investment portfolio than what they’ve accumulated. You should consider dividing your investment portfolio into a “lifestyle” portfolio, invested conservatively, with a focus on producing retirement income, and a “legacy” portfolio, invested more aggressively, with a focus on maximizing your retiree’s legacy.
Neglecting to review life insurance policies. Make sure that you have a list of all of your insurance policies, including account numbers. Review them to be sure they reflect your current needs and that they align with your updated estate plan. Don’t forget to check on beneficiary designations.
Reference: The Almanac (December 26, 2017) “Five mistakes to avoid when planning your estate”