Estate planning is a significant undertaking. It gives us a way to transfer what we’ve accumulated throughout our lives to those we hold dear. Passing down properties and personal items can convey familial bonds and affection and even offer financial assistance to our loved ones.

1. Have an actual plan

What’s the initial and crucial step in estate planning? It might seem a little too obvious, but the answer is simply to get a plan in place. Consider who will inherit what and provide clear specifications. Yes, there are numerous other minor and major aspects to estate planning that are vital, but without an actual plan and arrangement in place, you may put an undue burden on your heirs in the wealth transfer process.^[1]

2. Consider a contingent beneficiary

One important aspect to consider, particularly regarding your retirement savings, is to verify that you have correctly identified and spelled your beneficiary’s name. A minor error, such as a misspelled name, can cause numerous issues while managing your estate. Moreover, it may be beneficial to designate what is referred to as a contingent beneficiary for your retirement funds.^[1] This alternate beneficiary will inherit the money in your accounts if your primary beneficiary is incapable of accepting the funds.^[1]

3. Use gifts to your advantage

Tax considerations often take center stage in estate planning. Strategizing around taxes forms a crucial aspect of personal finance because tax-related errors can cause a more significant dent in your hard-earned income than anticipated. However, one strategy to minimize estate taxes involves distributing some of your wealth before you pass away. As of 2023, the annual limit for tax-exempt gifts stands at $17,000.^[2] This stipulation allows you to present anyone with up to $17,000 within a year without dipping into your lifetime gift tax amount, which is $12.92 million in 2023.^[2] However, if you don’t give gifts during your lifetime, your estate will be liable for applicable wealth transfer taxes, leaving less behind for your heirs. If estate taxes worry you, gifting can serve as an effective method to alleviate some of these tax burdens.

Conclusion

Navigating the complexities of estate planning can be challenging, and even minor errors can create substantial problems for your family. The same is true for retirement planning. If you’re in need of assistance in planning your retirement, consider getting in touch with our consultants today for a free assessment of your current position.