You may have spent years thinking about retirement around one basic question: will I have enough to support the life I want?
Once you’re retired, another question often moves to the front: what happens to what remains?
For some retirees, that means leaving assets to children or grandchildren. For others, it’s supporting a favorite charity, church, school, or community organization. Often it’s some mix of both. Estate planning helps connect those intentions to the accounts and assets you’ve built over a lifetime. Your will or trust is part of the picture, but so are your retirement accounts, beneficiary designations, charitable gifts, insurance, taxes, and the income you may still need in retirement.
Start With the Legacy You Want Your Money to Support
Before digging into individual accounts or documents, it helps to think about what you want your resources to accomplish, whether that’s providing for family members, making a charitable organization part of your estate, or combining lifetime and future gifts. Your priorities may shift over time, too.
That’s why it’s worth looking at your retirement income plan and your estate plan together. Money you expect to spend during your lifetime generally needs to be handled differently from assets you expect to pass on to someone else.
Review Beneficiary Designations Alongside Your Estate Documents
Beneficiary designations are easy to overlook, because they sit inside individual retirement accounts, employer plans, life insurance policies, and other accounts rather than in your will. But they carry real weight: FINRA notes that retirement accounts and insurance proceeds generally pass directly to named beneficiaries, and those designations can override what your will says.
So updating a will without checking your account beneficiaries can leave part of your estate plan out of sync. It’s worth reviewing both primary and contingent beneficiaries and asking whether they still reflect your family and your intentions.
Consider Which Assets You Want to Leave to Charity
If charitable giving is part of your legacy, which asset you give can matter, and it’s worth discussing with your financial and tax professionals. For retirees who’ve reached age 70½, a qualified charitable distribution (QCD) is one option to explore: a distribution sent directly from an eligible IRA to a qualified charity that, depending on your circumstances, may be excluded from income and can count toward your required minimum distribution. The rules and annual limits change, so confirm the current requirements before you act.
Charitable giving can also happen through your estate. Federal tax rules generally allow a charitable deduction for qualifying property transferred to charity from an estate, subject to the applicable requirements. The real planning question is how your charitable intentions fit with the rest of your retirement income, family, and estate goals.
Think About the Next Generation, Too
Leaving an IRA or other retirement account to a child or another individual can carry implications well beyond the account’s current value. Inherited retirement accounts come with distribution rules that vary by the beneficiary’s relationship to you and other circumstances, and the IRS notes that the SECURE Act changed how distributions from inherited accounts are determined.
That’s one reason it helps to treat your retirement accounts as part of your estate plan, not something separate from it. A financial advisor and tax professional can help you think through how different assets fit your transfer strategy, while an estate-planning attorney handles the legal documents and structures.
Make Sure Your Plan Reflects Your Intentions Today
Estate plans can drift out of date as families, assets, charitable priorities, and finances change. A review is especially worthwhile after a major life event, a marriage, divorce, a death in the family, the birth of a grandchild, a significant change in assets, or a shift in your charitable priorities.
A few questions are worth talking through:
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- Who are the primary and contingent beneficiaries on your retirement accounts and insurance policies?
- Do your beneficiary designations coordinate with your will or trust?
- Which assets do you expect to use during retirement, and which might eventually be transferred?
- How might charitable giving fit into your retirement income plan?
- Are there tax considerations tied to giving different types of assets?
- Would a charitable gift during your lifetime or through your estate better reflect your intentions?
- What should your family know about your wishes and the location of important documents?
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Give Your Retirement Plan a Legacy Perspective
Retirement planning doesn’t necessarily end when you stop working. As your priorities shift from building assets to using and passing them on, your plan may need to address both the life you’re funding today and the legacy you hope to leave. The right approach depends on your family, finances, charitable goals, and estate documents, and bringing your financial advisor, tax professional, and estate-planning attorney into the same conversation helps you see how the pieces fit together.
A good next step is to review your beneficiary designations, charitable intentions, and estate documents and ask whether they still reflect what you want your resources to accomplish. If it would help to work through it, you can connect with Craft & Sage to start that conversation.
