Retirement Planning in Houston, Texas

Consider Creating a Retirement Benefits Trust

Chances are your children have left the nest with lives and children of their own. You have had a chance to see how your children have developed and who you can count on to help you in the future with financial and medical decisions. As a result, you may wish to make changes in that regard to your estate plan.

Simplifying your estate plan

Tax laws have also changed, along with your financial situation. Because of the higher estate tax exemption amount, there may be an opportunity to simplify your estate plan and eliminate some of the trusts you had included before to minimize the estate tax. This is also the time to review any trusts created in your current estate plan to make sure that they do not disqualify your assets from receiving a “step up in basis” to reduce capital gains taxes on the surviving spouse’s death.

Other things to think about

You may wish to include your grandchildren in your estate plan, perhaps contributing to their education.

If you have lost a spouse and are considering remarriage, you should explore a prenuptial agreement to protect your children’s inheritance.

If you have children who are in a profession that may give rise to a lawsuit (such as a doctor or lawyer) or if you are concerned about a child’s marriage and don’t want a child’s ex-spouse to receive part of your child’s inheritance, you will want make sure to leave a child’s inheritance to a trust and name the child as Trustee with the power to make distributions to himself or herself for health, support maintenance and education. This will protect your child’s inheritance from divorcing spouses and other creditors.

You may want to consider creating a retirement benefits trust to hold retirement benefits passing to a child or other non-spouse beneficiary. The retirement benefits trust can be structured to make sure that a beneficiary does not immediately cash in an IRA or other retirement plan, taking only the annual required minimum distribution. That leaves the retirement plan to grow tax free and results in less paid in income tax because the tax is based only on the distribution taken, not on the whole account. This is referred to as taking advantage of the IRA “stretch.”

If you are in a second marriage, you may wish to implement the retirement benefits trust for your spouse so that amounts remaining in the retirement benefits trust at his or her death pass to your children, as opposed to the children of a second spouse.

Avoiding probate

If your estate plan involves a living trust, now is the time to make sure that all of your assets are either in the name of your trust or that they pass to your trust or another beneficiary at your death so that probate is avoided.

When we meet with you, we review the changes in your family situation, your assets, and your goals, then work with you to come up with an updated plan to accomplish your goals.