How Estate Planning Can Enhance Your Retirement and Protect Your Future

Estate planning is about more than just deciding who inherits your belongings. It’s a comprehensive strategy to manage taxes, safeguard your assets during your lifetime, and make the process of transferring wealth easier for your loved ones. As highlighted in a recent Kiplinger article, “Here’s How Estate Planning Can Make Your Retirement Easier”, proper planning ensures a smoother retirement and greater peace of mind for both you and your heirs.

The Importance of Trusts in Estate Planning

Trusts are one of the most effective estate planning tools for protecting assets. They can shield your wealth from excessive taxation and ensure that it is passed on to your heirs according to your wishes. However, timing is critical, especially if you may need long-term care in the future.

For instance, if you’re considering applying for Medicaid for long-term care, remember that Medicaid has a five-year look-back period. This means that assets transferred to a trust must be in place for at least five years before they are considered exempt from Medicaid’s asset limits.

Let’s consider a scenario: You set up a trust when you’re 70, but at 73, you need long-term care. Medicaid will not consider your assets exempt until you reach 75. While it’s impossible to predict when you might need care, planning ahead ensures you’re prepared when the time comes. Speak to an estate planning attorney about a Medicaid Asset Protection Trust to find out if it’s right for you.

Using Life Insurance to Offset Estate Taxes

Although the federal estate tax exemption is currently high, state estate taxes and inheritance taxes can still pose a concern. In the event that the federal exemption sunsets in 2026, life insurance can be a useful tool to provide liquidity for estate taxes.

Life insurance policies that also include long-term care coverage are becoming increasingly common. This dual-purpose approach can help with both estate taxes and long-term care costs, making it a smart option for planning as we age.

The Pitfalls of Beneficiary Designations

A common yet often overlooked aspect of estate planning is beneficiary designations. If you’ve named a beneficiary on a financial account or life insurance policy, that person will receive the asset—regardless of what your will says. Failing to update beneficiary designations after major life changes can create complications and unintended outcomes.

It’s crucial to review and update these designations whenever you revisit your estate plan to ensure your assets go to the right people.

Ongoing Estate and Retirement Planning

Once your estate plan is in place, it’s important to remember that estate and retirement planning are ongoing processes. Changes in tax laws, market conditions, and personal circumstances may necessitate adjustments to your plan.

We recommend reviewing your estate plan every three to five years to ensure that your beneficiaries are correctly named, trusts are funded properly, and your will complies with your state’s laws.

How We Can Help

At The Werner Law Firm, our experienced attorneys specialize in guiding individuals through the estate planning process, ensuring that both your retirement and your loved ones’ future are protected. Estate planning isn’t just about who inherits your wealth; it’s about reducing taxes, preparing for healthcare needs, and making asset transfers as smooth as possible for those you leave behind. By planning ahead, you create a clear path for the future, reduce uncertainty, and protect your peace of mind.

If you have any questions, schedule a free appointment with us through our online appointment page.

You can also read reviews from some of the hundreds of clients we have helped over the years.

Reference: Kiplinger (Feb. 18, 2025) “Here’s How Estate Planning Can Make Your Retirement Easier”