The Basics of Estate Planning

Think it more satisfactory to live richly than die rich.

—Sir Thomas Browne

If you’re like many of my clients, you’re worried about more than just ensuring that your assets will help create a comfortable retirement. You may also be looking ahead to the legacy you leave to your children and grandchildren after you’ve passed away.

As I discussed in Chapter 3, retirement planning changed during the baby boom generation. The decline in private pension plans and the subsequent introduction of IRAs and 401(k)s meant that people were now responsible for their own retirement income streams. If you want to have income in retirement, you have to put money away yourself.

This shift also drove a sea change in estate planning. Where before retirees could simply rely on their pension and Social Security for income and pass along their savings to their children, people today have saved money out of necessity. Your savings, in other words, are no longer a Rainy Day Fund that can simply be passed along to your kids—they are the foundation of your retirement plan. Combined with the fact that many retirees have already paid to put their children through college, it’s increasingly common for people to spend down the majority of their savings during their retirement, leaving less to pass along to their heirs.

Of course, that’s not to say that estate planning has become any less important. Even if you’re not inclined to make sacrifices in order to pass money ...

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