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Retirement assets are part of an estate plan

On Behalf of | Jul 21, 2021 | Estate planning

Retirement assets are a vital part of every estate plan. Delaware residents rely on these assets to fund their retirement and eventually provide an inheritance for their children. Regardless of what you want to do with your retirement assets, planning is important.

Select and designate the beneficiaries for your account

The first thing to do is make sure that you have your beneficiaries designated for your retirement assets. These are not passed down in a will. Without beneficiary designations, there could be a legal struggle over your account. Make sure that your account is properly titled for the best possible tax treatment. In addition, retirement asset rules are rapidly changing. Make sure that you understand the latest legislation because it impacts when you need to make required withdrawals from your account.

Learn and review the tax treatment of your assets

Then, you should understand how these assets are taxed when they are passed down to your children. The type of account that you have may qualify you for favorable tax treatment. One of the biggest benefits that your beneficiaries could receive is the step-up basis for the purchase price. This would reduce the capital gains tax that your beneficiaries need to pay when they inherit the asset. First, you should identify the assets that you need for your daily life and what may be extra that would be passed down to your heirs. This is the basis for understanding your exact situation.

An estate planning lawyer could help you prepare for retirement. They know the latest tax rules and how your estate would be treated. Retirement assets are one part of a comprehensive estate planning strategy that could make life much easier for your beneficiaries, both when you are here and after you are gone.