Facts are stubborn things. We all want to retire successfully and pass a meaningful legacy. However, studies have shown that 70% of family wealth is lost by the end of a family’s second generation and 90% by the end of the third.
You need to act now to help your loved ones avoid becoming one of these statistics. When you are getting ready for retirement, you must educate and update your heirs about your wealth transfer goals and the plan you have put in place with the help of a dedicated trust attorney assistance. Here is a checklist covering 10 vital points of preparing for retirement.
The Ultimate Guide on How to Prepare For Retirement
You must communicate the following information to your family to ensure that they will have the information they need during especially difficult times:
1. Save For Retirement! The earlier you start, the more wealth you accumulate - it is an integral part of all the winning retirement planning solutions.
2. Consider purchasing Long Term Care Insurance, especially if you start planning for retirement early - for example, at 30.
3. Document and Track your Budget and Net worth statement, or at the very minimum keep a broad overview of your wealth.
4. Create an Estate Plan - this one of the vital things to do to prepare for retirement.
Here is the list of estate planning documents that have been created to set up retirement income plans and explanations of what purpose they serve:
- Durable Power of Attorney, Health Care Directive, Living Will – property management; avoiding guardianship; clarifying wishes regarding life-sustaining procedures
- Revocable Living Trust – avoiding guardianship; keeping final wishes private; avoiding probate; minimizing delays, costs and bureaucracy
- Last Will and Testament – a catch-all for assets not transferred into your Revocable Living Trust prior to death, or the primary means to transfer your wealth if you are not using a Revocable Living Trust
- Irrevocable Life Insurance Trust – removing life insurance from your taxable estate; providing immediate access to cash
- Advanced Estate Planning – protecting assets from creditors, predators, outside influences, and ex-spouses; charitable giving; minimizing taxes; creating dynasty trusts
5. Determine who will be in charge if you become incapacitated or die RIGHT NOW. The best way to prepare for retirement is to leave proper instructions for your heirs right away. It can be the agent named in your Durable Power of Attorney and Health Care Directive; successor trustee of your Revocable Living Trust and other trusts you’ve created; personal representative named in your will, etc.
6. Look at the Benefits of Lifetime Discretionary Trusts created for your heirs such as:
- Fosters educational opportunities
- Provides asset, divorce, and remarriage protection
- Protects special needs beneficiaries (if properly drafted)
- Allows for professional asset management
- Minimizes estate taxes at each generation
- Creates a lasting legacy for future generations
7. Think through your overall goals and intentions for inheritance – what the money is, and is not, to be used for (in other words, education vs. charitable work vs. vacations vs. Ferraris vs. business opportunities vs. retirement), and who will be trustee of lifetime discretionary trusts created for your heirs and why you’ve selected them.
8. Where you are storing important documents – this should include how your agents access your “digital” assets, which is frequently overlooked!
9. Keep a list of your key advisors and how to contact them in case you need more tips for retirement planning.
10. Communicate and maintain your plan – don’t let your plan go stale after a couple of years. Regularly check and make sure it still works.
How Your Professional Advisors Will Help You With This List
The importance of retirement planning must not be underestimated. Your professional advisors are well-positioned to help you discover your wealth priorities, goals, and objectives and then communicate this information to your heirs. This, in turn, will prepare your heirs to receive your wealth instead of being left to figure it out on their own and, as statistics have shown, lose it all.
The professionals at Miller Law Firm, PC, are available to assist you with figuring out how to start planning for retirement, including fixing your wealth transfer goals, putting a plan in place to achieve these goals, and effectively communicating this information to your loved ones.
Contact Us today – we would love to help guide you on the path to retirement.