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How Does Estate Planning Affect My Retirement?

Estate Planning Lawyer Eric Gullotta

Both retirement planning and estate planning should begin long before you even get close to retirement age. The work you do in one area affects the other, so it is important to consider both your own needs in retirement and the needs of your family after your passing. Learn more about how your estate plan could affect your retirement.

Are estate planning and retirement planning related?

Estate planning and retirement planning do overlap to some degree, but in general, they are distinct areas of financial and life planning. Retirement planning covers your golden years after you stop working, ensuring that you can maintain a quality of life you are happy with. Estate planning delves into what happens when you become incapacitated or pass away. This involves carefully balancing your assets to meet your needs while you’re alive while still leaving enough to provide for your loved ones after you pass.

What do I need to consider while estate planning and planning for retirement? 

The main idea to consider while planning for your and your family’s future is this: you have a limited pool of assets, so how do you want those assets to be used? You’ve worked hard your whole life to build up your assets, so you want to enjoy a high quality of life while in retirement. However, you also want to leave enough for your loved ones to meet their needs and maintain your legacy. When you begin working with an estate planning attorney, it’s important to let them know about your retirement accounts and give them an overview of your retirement plans and goals. This allows them to make estate planning recommendations that align with your plans for retirement.

How are my retirement accounts handled when I die?

Many retirement plans require a named beneficiary who will take control of the accounts after the owner passes away. These are typically referred to as transfer-on-death accounts. Ensure that your accounts have the correct beneficiaries. Many people forget about this aspect of estate planning, but you should be reviewing your beneficiaries and transfer-on-death accounts regularly.  Consider, for example, if you name a spouse as a beneficiary. You divorce some years later but never change your account beneficiaries. Your ex-spouse could receive funds that you would have wanted to go to your children. Any number of situations could lead to similar conundrums, which is why regular estate plan reviews are essential.

How do revocable and irrevocable trusts affect my retirement? 

One of the primary areas where retirement planning and estate planning overlap is Medicaid planning. If you need long-term care in your later years, you could spend hundreds of thousands of dollars getting the care you need—unless you qualify for Medicaid. However, Medicaid only pays for long-term care if you meet strict income and asset requirements.

This is where estate planning comes into play. With a trust, you may be able to offload assets and qualify for Medicaid. However, California has a 30-month look-back period. Any assets transferred during this time can subject you to penalties or delay your eligibility.

The type of trust you have is also important. A revocable trust in which you still have access to and control over assets is viewed as a countable asset by Medicaid. An irrevocable trust in which you give up all control of assets as soon as the trust is created is not a countable asset, so you can protect your assets from seizure and still qualify for Medicaid.

It’s important to discuss these and other options with your Sonoma estate planning attorney.

Explore Your Estate Planning Options Now 

The earlier you begin your estate plan, the more time you have to ensure that it meets your needs and properly uses your hard-earned assets. Eric Gullotta and Gullotta Law Group is here to help. During your free case evaluation, we’ll discuss your goals and how to reach them. To schedule your appointment, fill out our contact form or call us at 707-938-7234.

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