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Asset protection via estate planning as you approach retirement 

On Behalf of | Jun 20, 2024 | Estate Planning

As you approach retirement, safeguarding your assets becomes an increasingly important endeavor. Making this effort can help ensure your financial stability as your circumstances evolve. 

Effective estate planning can play a consequential role in asset protection in ways that reflect your unique needs and goals. When done right, employing various asset protection strategies can help you manage and preserve your wealth while minimizing risk.

Establishing trusts

One of the most straightforward ways you can protect your assets involves establishing trusts that can later be used to transfer wealth to the next generation.

A revocable living trust permits you to retain control over your assets during your lifetime and provides a clear plan for asset distribution upon your death, which can help your estate (and your loved ones) to avoid the costs and stresses of probate. 

By contrast, an irrevocable trust can help you to minimize long-term care costs and other potential liabilities, but it does involve rescinding ownership of trust assets. As such, this option should be carefully considered if the flexibility-related benefits of outright asset ownership are important to you. 

Retirement accounts and beneficiary designations

Retirement accounts, such as IRAs and 401(k)s, often have built-in asset protection features. Under many circumstances, these accounts are protected from creditors, providing a safe harbor for your retirement savings. 

Properly designating beneficiaries for these accounts can help your assets pass directly to loved ones or charitable causes, bypassing probate and providing immediate financial support to those named. You’ll want to regularly review and update beneficiary designations attached to these accounts to better ensure that your current stated preferences align with your evolving estate planning goals. 

Gifting strategies

By gifting assets to family members or setting up a trust for their benefit, you can transfer wealth out of your estate, thereby reducing potential estate taxes and protecting assets from future claims. Yet, it’s important to be mindful of the potential tax implications of direct gifting to maximize the benefits. 

Getting started

Asset protection is often a complex undertaking, especially for those with substantial wealth and – on the flip side – those concerned that long-term care costs will devour their modest savings. Know that if you’re approaching retirement, you don’t have to navigate the complexities of this process alone. Seeking personalized guidance and support is always an option.