Estate planning isn't just for the wealthy. Every retiree should have at least the foundational documents. Beyond the basics, retirement-specific concerns — beneficiaries, healthcare decisions, trust structures, RMD planning — make the work more complex than during working years.
This page covers what changes at retirement.
Every retiree should have:
Specifies asset distribution at death. Names executor.
For retirees, the will is often a backup — most retirement assets pass via beneficiary designation, bypassing the will. But the will catches:
Update on major life changes (divorce, death of beneficiary, new family).
Authorizes someone to handle financial matters if you become incapacitated.
For retirees, the risk of incapacity grows with age. Without POA, family must petition for guardianship — slow, expensive, public.
Pick a trustworthy, capable agent. Often spouse or adult child.
Authorizes medical decisions if you can't make them.
Pair with advance directive (living will) specifying treatment preferences.
For retirees, this is non-optional. Medical incapacity scenarios increase with age.
Allows healthcare providers to share medical info with named persons.
Often executed alongside the healthcare proxy. Without HIPAA authorization, even close family may struggle to get information.
Most retirement assets pass via beneficiary designation, not will:
Beneficiary designations supersede the will. If your will says "everything to spouse" but your IRA names ex-spouse as beneficiary, ex-spouse inherits.
Once a year:
This single practice catches most major estate-planning failures.
Most retirees don't need trusts. But specific cases benefit:
For high-probate states (CA, FL, NY) or substantial real estate. Avoids probate; provides incapacity management; offers privacy.
For retirees with $1M+ estates and complex assets, often worth setting up.
For simpler estates, may be overkill.
For heirs with disabilities. Provides for them without disqualifying from government benefits.
If applicable, essential.
For estate-tax-exposed estates. Less commonly relevant after 2017 changes raised federal exemption to ~$13M per person.
State estate taxes have lower exemptions in some states (NY, OR, MA, others); ILIT may help there.
For IRAs left to trust beneficiaries. Properly structured trusts allow stretch distributions; improperly structured trusts force lump-sum distribution and worse tax treatment.
If considering trust as IRA beneficiary, requires expert drafting.
Required Minimum Distributions start at age 73 (or 75 for younger cohorts post-SECURE 2.0).
Estate-planning interactions:
After 70.5, qualified charitable distributions count toward RMD without taxable income. See CharitableGivingInRetirement.
Post-SECURE Act (2020): non-spouse beneficiaries must distribute the IRA within 10 years (with some exceptions).
This eliminated the multi-decade "stretch IRA." Tax planning for non-spouse heirs is more constrained.
Pre-RMD: convert traditional to Roth in low-tax years. Reduces future RMD; provides tax-free inheritance.
For retirees with large traditional balances, Roth conversion ladder is often valuable.
LTC costs can deplete estates. Estate planning must account for:
For estates of $500K-$2.5M (where LTC most likely to consume), this is meaningful planning. See LongTermCareInsurance.
Estate planning is state-law-driven. State of residence matters:
If you move in retirement (downsizing, climate), update estate documents for the new state's rules.
Estate plans degrade. Triggers for review:
Without periodic review, estate plans become outdated. The 10-year-old will doesn't reflect current family reality.
The single most common estate-planning failure. Ex-spouse still listed; deceased relative still listed; new heirs not added.
No will; no power of attorney; no healthcare proxy. Incapacity or death produces chaos.
Revocable trust set up; assets not transferred into it. The trust is empty; provides no benefit.
Family can't get medical information during emergencies.
Documents valid in old state; may not be valid in new. State law matters.
Multi-trust structure that family can't manage. Pick complexity that the family can handle, or include trust company as trustee.
Charitably inclined; donating from after-tax accounts after RMD age. QCD would be more efficient.
For typical retirees:
For high-net-worth: more sophisticated planning with attorney and tax advisor.