The process and success of retirement requires consideration of several areas of planning and decision-making, in many of which lawyers can play a role. For those approaching retirement, it is difficult to decide which providers of products and services to engage. But the choices made are the difference between a comfortable retirement and a struggle to continue the previous lifestyle. The topics that create a program of effective, independent retirement counseling include the following:
Estate Planning
The prospective retiree should have a comprehensive review of the estate plan for husband and wife. The enactment of federal tax legislation in January has changed the rules for planning to avoid federal estate tax. In some cases, previous forms of planning might no longer be necessary, and further planning might involve dismantling earlier planning. For example, some individuals established qualified personal residence trusts in earlier years as a way of reducing potential estate tax liability. But QPRTs also impose restrictions, and generally eliminate the possibility of obtaining a step-up in basis at the donor’s death. But if it’s no longer necessary to minimize federal estate taxes, it might be more tax efficient to consider obtaining the income tax benefit of a basis step-up by disqualifying the QPRT. In a variety of ways, the estate-planning ground rules have changed, shifting in many situations to consideration of federal income-tax issues and state death-tax issues. Where individuals have assets in excess of the federal estate tax exemption amount ($5.25 million for death in 2013), planning to minimize estate tax will still be important, but that planning too should take into account federal income taxes and state death taxes. We can predict that there will be further tax legislation, requiring frequent resetting of tax goals and the ways to achieve them.
Other Estate Planning Issues
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