Preparing For Retirement…Some Key Estate Planning Questions to Consider
Financial & Estate Planning, Insurance - Life Settlements, Karl Edmunds |
Estate Planning
by Karl Edmunds, Founder eKaBoomers
Retirement planning frequently ranks lower on our financial “to do” list than other items. For most people, the initial thought about retirement and estate planning is preparing personal Will. But when you finally reach 50+ years of age and you face the reality of having only a few years left in your working career, retirement begins to take on a new urgency that every Boomer or Senior should thoughtfully consider, sooner than later.
A few of the basic questions are:
What does a good estate plan cover?
- Too often seniors assume by having a Will, their entire estate is covered. This is not the case. There are assets such as company sponsored 401Ks, life insurance and your IRAs that are not subject to the provisions of your Will. The disposition of these assets is driven by the beneficiary(s) you have designated. Therefore, it is essential to make sure your designated beneficiaries are up to date and in harmony with other aspects of your overall asset base and estate plan.
I am over 60 years old. Am I insurable?
- Frequently seniors 60+ years of age have the common belief that life insurance is not available, life insurance companies don’t want seniors and if they did the insurance is certainly not affordable. This is not true. If you are healthy, there is a strong and growing senior life insurance market pursued by a large number of insurance companies. In fact, finding out if you are insurable is one of the first key steps in creating an estate plan
How do I calculate my insurance capacity?
- In most situations, insurers are willing to write life insurance equal to 75% to 125% of the individual’s net worth. The variance or range is driven by various factors including health of insured, asset mix and market conditions at the time. In addition, if the insurance policy is being placed into force by some form of premium financing, this may also have an impact. Each person must evaluate their personal insurance capacity as they examine their particular estate planning objectives including estate taxes, family needs and charitable desires.
How can I avoid wasting the Federal Exclusion amounts?
- Over the years, Federal Tax Law has slowly increased the amount a person may leave his or her heirs without any taxes. Each spouse is permitted to leave an amount equal to the exclusion permitted by law at the time of death but for each spouse to fully utilize the exclusion amounts allowed, a more sophisticated approach is required than simply having a Will. In most cases, a Will provides for the surviving spouse to inherit all of the deceased spouse’s assets. This increase in assets may place the surviving spouse’s estate beyond the exclusion limit and making all the assets in excess of the exclusion exposed to federal estate taxes. There are trust solutions to this problem that are readily available. Talk to an advisor.
How should my estate plan handle my business interests?
- Seniors are staying involved longer in business enterprises before exiting. This is a requirement for a growing number and a choice by others. This dimension of the estate plan requires careful consideration since other stakeholders in the company can be impacted. A key estate planning tool in these cases is a good buy-sell agreement with other equity participants or key employees. In addition, well planning proper buy-sell agreements can be funded through life insurance paid for by the company. Finally buy-sell agreements take into consideration effective transition planning issues among family members and key employees to avoid disputes and needless litigation that can occur at the death of a key participant.
Next Steps
The best action for every Boomer is to take action now and don’t wait. Find a good advisor, talk openly and honestly about your plans and wishes and then develop a solid plan that you can follow. Adjustments are always needed along the way, but starting with a written plan keeps you on track and gives you the critical ability to measure your progress toward your goals.
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Tags: baby boomers, boomers, estate plan, estate planning, life insurance, life settlements, RETIREMENT PLAN, senior citizens, will preparation, wills
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