When Heirs Count on Your Wealth as Their Retirement Plan

Having an estate plan and retirement plan protects you, but is often a sensitive topic for families. If your child or children count on your wealth as their retirement plan, you may feel even greater pressure to get it right. An estate planning and elder law attorney in Michigan protects your best interests as you age even if what you want conflicts with what your children want. According to a recent article by CNBC, a survey by HSBC found many Americans invented a retirement plan “workaround.” They hope to inherit enough money from loved ones to supplement their scrawny retirement income from Social Security and underfunded pensions, 401(k), IRA and other retirement accounts. After the Great Recession, a lot of Michigan baby boomers in their 50s and 60s faced challenges getting full-time work with retirement benefits. Without steady income, it’s hard to save for retirement. The survey of working-age people showed about 50 percent assumed they will receive an inheritance to support them. Three of 10 who did think they would get an inheritance said it would partly or fully fund their retirement. Experts point out that banking on an inheritance is a financially catastrophic assumption. For the older generation involved in estate planning, it’s also an emotional issue.

Open up a dialogue

If you feel worried that your loved ones have unrealistic expectations about your estate, talk to an elder law attorney to draw up a retirement plan trust. When you sit down with your attorney, ask the specific questions you have about how to talk to your heirs and what kind of pertinent information most people share. If you feel comfortable doing so, ask your child or children to accompany you to see your elder attorney. According to CNBC, some older people don’t feel comfortable telling their children what kind of assets and how much money they are leaving.

Protect your assets

Asset protection is an important goal whether you plan to leave assets to relatives or just want to have enough to pay for your ideal end-of-life medical and health care as well as long-term care facilities. While you are living, you want the best qualify of life and care. When you pass away, you don’t want your assets eaten up through taxes and probate. The essential job of an elder attorney is to fulfill a client’s wishes by providing maximum protection from insurance and legal tools.

  • Give while you are living

Some senior citizens rather give as much as they can while they are living. Some ideas for sharing wealth with loved ones if you are under age 59 and a half include taking up to $10,000 from a Roth IRA account to help pay for college or for a child or grandchild’s first home purchase. According to a piece by Kiplinger.com, you can take the money out penalty free. If you are older than 59 and a half, you can take out as much as you want from a Roth without incurring taxes. CNBC points out a lot of seniors do prefer to spend money on loved ones while they can see their money at work.

Encourage your child to save

One of the best favors you can do for your child who depends on your wealth is to refer them to your estate planning attorney for guidance. Whether your child needs to beef up contributions to a 401(k) or other company-sponsored retirement plan or contribute to a Roth IRA, an estate planning attorney will review their retirement plans. If you do pass away, your children could inherit your retirement accounts. An estate planning attorney will help your heirs figure out the best way to protect the assets.

Elder law and estate planning attorney Christopher J. Berry and the Elder Care Team understands that retirement planning is difficult but necessary. You and your children who depend on your wealth will find financial peace of mind with a Michigan Retirement Plan Trust. For more information on retirement planning and how to talk to your children about your estate plans, please contact us.

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