Coordinate Retirement and Estate Planning For Improved Client Relationships

Posted by Robert L. Arone

Retirement accounts are designed to help make the transition between working and retiring easier. They provide a steady stream of income for retirees who are suddenly without take-home pay for the first time in their lives. These accounts require extra planning and consideration since, unlike other assets your clients may have, retirement account distributions are subject to income tax for the account owner and the designated beneficiary after the owner’s death.

It is important that any plans for retirement match up with the plans a person has for their estate. Of course, planning for retirement assets is often motivated by different goals than estate planning because of income taxes. It is critical that financial advisors take the opportunity to talk with their clients about the differences when meeting for a review of their plans.

By having long-standing relationships with clients, you have unique insight into their financial background, goals, and anxieties. Perhaps more than any other professional, you can help ensure that their retirement plans and estate plans do not contradict one another. Clients worried about their health or their ability to care for loved ones want reassurance that their nest egg is enough to cover living expenses, medical bills, and more.

The unique rules of retirement funds should be taken into consideration when making long-term estate plans. Income tax rules can complicate the wishes of your client. While assets may be set aside in trusts, naming a trust as the designated beneficiary requires the trust to have very specific provisions that comply with federal law and ensure maximum protection and stretch for the ultimate beneficiaries.

Always review beneficiary designations with clients each time you meet. It can help ensure that their wishes are respected should they pass before your next review. Fail to do so, and your client’s loved one could be forced into court to contest the distribution while grieving.

Retirement and estate planning should always be in progress. With no clear finish line in sight, you’ll want to prepare your clients for anything that life might throw their way. If you have concerns about how your clients’ retirement goals align with their estate plan, give us a call. We are here to answer any estate planning questions you may have and to develop a strategy that will help preserve the client’s lasting legacy.

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