Retirement and estate planning is a family affair


Chet Osterhoudt


Chet Osterhoudt
Business Columnist

Friday, June 24, 2016

You need to inform your spouse and your grown children what you have in mind for the future because the more they know, the fewer the surprises that await them down the road.

Let’s start with your spouse. Ideally, you and your spouse already should have communicated about your respective ideas for retirement and have come to an agreement on the big issues, such as when you both plan to retire, where you’ll live during retirement and what you want to do as retirees (volunteer, travel, work part time and so on).

But what you both might have let slip through the cracks are the important specifics related to financing your retirement. You’ll need to answer several questions, including:

— When will you each start taking Social Security?

— Are there strategies for maximizing your Social Security payments?

— When will you need to start tapping into your respective retirement accounts, such as your individual retirement account and 401(k)? Once you do, how much should you take out each year?

You might want to work with a financial professional to address these issues, but however you proceed, you and your spouse need to be on the same page on the key financial components of your retirement.

Now, consider your grown children. You need to clearly communicate your estate plans to them, not only for the sake of openness and honesty but also because they might play active roles. When talking to them, make sure you cover these areas:

— Durable power of attorney – You might decide to give one of your grown children the durable power of attorney to pay bills and make financial choices on your behalf if you are unable to do so.

— Estate executor – You’ll want to choose someone who is honest and capable of dealing with legal and financial matters. Again, you could ask a grown child to serve as your executor, but, to avoid potential conflict of interests among your children, you might want to go outside the family. Talk with your attorney about how best to name your executor.

— Status of will and living trust – Assuming you already have drawn up a will, share it with your grown children. The same is true with a living trust, a popular estate-planning tool that might allow your survivors to avoid going through the time-consuming, public and expensive process of probate. A will and a living trust contain a great deal of information your children should know; so take the time to explain your thinking when you created these documents.

This article was prepared by Edward Jones for use by Chet Osterhoudt, an Edward Jones financial adviser in Nashville.