Scenario Planning

Even if you set up an estate plan decades ago, you might need to make updates. Here&rsquo;s what you need to know about estate planning in today&rsquo;s changing circumstances.

About This Class

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
Planning your estate is an important part of providing for your needs during retirement and securing your legacy after you pass. But it&rsquo;s one that many people decide to put off or skip altogether.&nbsp;
As of 2025, only 24%1 of Americans possess crucial estate planning documents, like a will or a trust. Retirement is the perfect time to either create or review your estate plan to make sure that your wishes are followed and your estate is handled the way you want. Not only will you have a clearer picture of what your estate will include at that point in your life, but you might want to make some changes to any plans that might have been made earlier based on your relationship status.
<h2>What is Estate Planning?</h2>
Your &ldquo;estate&rdquo; is the term used to indicate everything you own: bank accounts, real estate, cars, clothing, collectibles, cash, and even your social media account and data. Estate planning is the process of giving direction to your estate so that your assets are handled as you wish when you become incapacitated or in the event of your death.
Part of estate planning involves conversations with your loved ones to ensure they understand the process and know your wishes. It can be difficult to think about your own incapacitation or death, but the reality is that those around you need to know how to handle matters. Talk to your family and other trusted loved ones about how you want your healthcare managed, what to do with your finances, and to whom your money and other assets should go after your death.
Understand, too, that estate planning isn&rsquo;t a one-time event. It&rsquo;s important to review your estate plan at least every two or three years or when you experience a major life event (like a birth, marriage, divorce, death, or a move), even during retirement. As you review your estate plan, you will discover that there are a lot of important decisions that need to be made including an update of the terms of your will to clarify which assets should go to whom and when, change, add or remove beneficiaries, and even make adjustments to aspects of your investment portfolio or trust based on your retirement status.
This course includes lessons on key retirement focused estate planning topics including:
<ul>
<li>Writing a Will. Secure your legacy and wishes after you pass.</li>
<li>Choosing Power of Attorney. How to decide who will make decisions on your behalf if you become unable to make your own choices.</li>
<li>How and Why to Assign a Beneficiary to Your Investment Accounts. Learn how to reduce the chances that your assets will be destroyed through the probate process after you pass.</li>
<li>Trusts. The importance of using trusts to manage your assets and see they are passed on in the name of your legacy.</li>
<li>State-Level Considerations for Estate Planning. Pay attention to the different state laws that could impact how your estate is passed on to your posterity.</li>
<li>Tax Considerations for Estate Planning. Overview of how taxes can impact your estate, including how it passes on to the next generation.</li>
<li>Recent Changes Affecting Estate Plans. Know what&rsquo;s different from a few years ago and how to update your estate plan to reflect new realities.</li>
<li>Planning for Final Arrangements. What you need to know when it comes to helping your loved ones make those last arrangements after you pass.</li>
<li>Estate Planning Checklist. Important items to consider as you enter retirement.</li>
</ul>
<h4></h4>
<h4>SOURCES</h4>
<ol>
<li>
Lustbader, Rachel. &ldquo;2025 Wills and Estate Planning Study.&rdquo; Caring.com, September 17 2025, <a href="https://www.caring.com/caregivers/estate-planning/wills-survey">https://www.caring.com/caregivers/estate-planning/wills-survey</a>. Accessed 23 December 2025.
</li>
</ol>

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<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
As you kick off your retirement journey, now is the time to review your will. If you don&rsquo;t already have a will, now is the time to write one.&nbsp;
Your will makes it clear what should happen to any children you have that are under 18 or need ongoing dependent care. You can also make arrangements for the proper distribution of your estate. If you care about your legacy, a will is a really important tool to let your loved ones know your wishes. If you don&rsquo;t have a will, then you may be leaving the decision of who gets your assets to the state. Someone who dies without a will is called intestate, and every state has a plan of dealing with intestate distribution: the handling of the estate of someone who dies without a will. And it is important to note that in most states if you have children, your surviving spouse does not take the lion&rsquo;s share. For example in New York, if you die without a will and are survived by a spouse and children, your surviving spouse gets the first $50,000 of your estate plus half the balance, the children get everything else.1 In fact, depending on your estate, the intestate distribution might certainly look like what you don't want to happen.&nbsp;&nbsp;
If you already have a will, retirement is a good time to review it, especially if you haven&rsquo;t looked at your will in several years. Some of the things to consider as you review your will include:
<ul>
<li style="font-weight: 400;" aria-level="1">Have your children grown up? Do you still need to make guardian provisions for them?&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Has your own situation changed? Are you divorced or widowed? Have you remarried since your will was last updated?&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">What about your grown children? Have they married or divorced since you last updated your Will? Do you have new grandchildren? Do they have special needs or maybe disabled?</li>
<li style="font-weight: 400;" aria-level="1">If you are married, does your will protect your surviving spouse? Have you made provisions for your spouse?</li>
</ul>
Pay attention to the changes in your family situation over the years. Retirement is a good time to reflect on your life since you&rsquo;re embarking on a new journey with new challenges and changes. Your will should acknowledge what&rsquo;s different about your life now.
<h2>Types of Will</h2>
Depending on your situation going into retirement, consider the different types of will available. They have different purposes in the way they fit into your estate plan.
There are four main types of will:2
<h2>Simple Will</h2>
This is a straightforward will that includes how you want your assets distributed, as well as who should take care of your dependent children and pets. Most people think of a simple will when they consider a will. If you&rsquo;re looking for a will that covers the basics, this type can make a lot of sense. Simply list out who should receive what and name an executor who oversees the process after you pass. It&rsquo;s important to realize, though, that some financial accounts may already designate a beneficiary. When you pass, the beneficiary you&rsquo;ve designated on such investment accounts takes precedence over what&rsquo;s in your will. (More on beneficiaries later in the class.)
<h2>Testamentary Trust</h2>
Testamentary trusts are trusts that are created in your will. In your will, you can direct a part or all of your estate to be held in trust for the benefit of one or more of your beneficiaries in such amounts as you determine. During the term of the trust, the trustee can pay out income and capital to your beneficiaries at certain times or at the discretion of the trustee. If you do not want your beneficiaries to receive any assets until they reach a certain age or ages, or if you do not want your beneficiaries to receive a big lump sum because you don't think they will be good stewards with what you are giving them, a testamentary trust is a good choice. Testamentary trusts can also be a good choice when you have children with special needs.&nbsp;
<h2>Living Will</h2>
Rather than focusing on what happens to your assets after you pass on, a living will is all about what type of medical care you want if you&rsquo;re no longer able to function or make decisions for yourself. With the living will, you decide in advance your medical wishes if you can no longer make such decisions; for example, deciding when it&rsquo;s time to stop extraordinary life-prolonging medical measures. As a retiree, having a living will is vital, since as you age there may be a point where you can no longer make healthcare decisions for yourself. It is important to note that a living will is not a substitute for a will or a testamentary trust. A living will is effective during life, whereas your will and a testamentary trust are only effective after you die.&nbsp;
<h2>Joint Will</h2>
A joint will is inflexible and designed for spouses who want to have the same beneficiaries and provisions. In general, a joint will &mdash; sometimes called a mirror will &mdash; is meant to ensure that the surviving spouse inherits everything and that the assets are only distributed after the death of both. It&rsquo;s important to note that if you choose to enact a joint will, it can&rsquo;t be changed even if one of you passes away. That means that if the situation changes or you change your mind about an aspect of the will after your spouse dies, you won&rsquo;t be able to adjust the terms of the will.&nbsp;
<h2>Deciding Which Will is Right For You</h2>
Carefully think about which type of will is the right move for you. Consider consulting with an estate planning attorney or an online estate planning service to determine which is right for you.

<h4>SOURCES</h4>
<ol>
<li>&ldquo;2013 New York Consolidated Laws EPT - Estates, Powers &amp; Trusts.&rdquo; JUSTIA US Law, <a href="https://law.justia.com/codes/new-york/2013/ept/article-4/part-1/4-1.1">https://law.justia.com/codes/new-york/2013/ept/article-4/part-1/4-1.1</a>. Accessed 30 December 2025.</li>
<li>What are the different types of wills and what should they include?&rdquo; LegalZoom, 13 November 2024, <a href="https://www.legalzoom.com/articles/what-are-the-4-types-of-wills-and-what-should-they-include">https://www.legalzoom.com/articles/what-are-the-4-types-of-wills-and-what-should-they-include</a>. Accessed 30 December 2025.</li>
</ol>

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
A power of attorney is a document that gives another person (your attorney-in-fact) the ability to act on your behalf in certain matters. In other words, in estate planning, it is frequently used to specify someone to make decisions about legal and financial matters if you&rsquo;re no longer able to make your own choices.&nbsp;
Designating a power of attorney during retirement is especially important because, as you age, there&rsquo;s an increased possibility that you may need a trusted family member or friend (your attorney-in-fact) to help you take care of your financial affairs (i.e. monitor your bank and investment accounts, pay bills...) and act on your behalf. Additionally, many retirees travel or engage in new activities that could potentially result in an unexpected accident. Illness and other issues can also crop up during retirement, making it a time that&rsquo;s especially important for you to have someone you trust ready to step in and act in your best interest.
<h2>How to Choose a Power of Attorney</h2>
When deciding on a power of attorney, there are three main things to consider:
<ul>
<li aria-level="1">Trustworthiness. Can you reasonably expect the person you choose as your attorney-in-fact to make good choices in your best interest? Do you know they will be honest?</li>
</ul>
<ul>
<li aria-level="1">Proximity. It&rsquo;s best to have an attorney-in-fact who lives near you. They can be on the scene to help out, as well as review documents and make other decisions quickly. In addition, different states have different rules about the types of powers and authorities you can give to your attorney-in-fact, which can complicate things if your attorney-in-fact resides in another state.&nbsp;</li>
</ul>
<ul>
<li aria-level="1">Good with money. Because your attorney-in-fact may be able to make decisions about your finances, it&rsquo;s often a good idea to consider someone who knows how to handle money and can be trusted to make responsible financial choices.</li>
</ul>
<h2>Types of Power of Attorney</h2>
There are different types of power of attorney. Some of them can be used together.1 Below, we&rsquo;ve listed some of the more common types that you may want to consider utilizing.
<h2>General Power of Attorney</h2>
This type of power of attorney offers the most control over your situation, so it&rsquo;s especially important that the person you choose be trustworthy and competent. Your general power of attorney can take care of real estate, financial, business, and legal issues on your behalf, whether or not you&rsquo;re incapacitated. In some states, they can even make gifts on your behalf. A general power of attorney can be useful if you&rsquo;re traveling, or if you&rsquo;re retired and don&rsquo;t want to handle your business needs.
<h2>Durable Power of Attorney</h2>
A durable power of attorney is basically the same as a general power of attorney. As soon as you sign the form, the person you&rsquo;ve chosen to act as your attorney-in-fact is empowered and authorized to act on your behalf. The benefit, though, is that it is durable and your attorney-in-fact can continue acting for you if you become unable to make your own decisions. In other words, your attorney-in-fact can act on your behalf even if you become incapacitated and cannot act for yourself. But a general power of attorney that is not durable will terminate when you become incapacitated and your attorney-in-fact will lose his or her authority to act on your behalf. You can rescind a durable power of attorney or a general power of attorney at any time if you fill out a revocation form provided you are not incapacitated.&nbsp;
<h2>Medical Power of Attorney</h2>
Also called an advance directive or healthcare proxy, the medical power of attorney allows someone else to make decisions about your healthcare or medical treatment when you are not able to make such decisions for yourself. For example, if you&rsquo;re incapacitated, the person you appoint as your attorney-in-fact pursuant to your medical power of attorney will make choices for you, often based on the guidance you&rsquo;ve set forth in your living will.
<h2>Limited Power of Attorney</h2>
Rather than granting broad authority to make decisions on your behalf, a limited power of attorney is designed to act in certain ways or with limited authority. For example, instead of giving a General Power of Attorney, which gives your attorney-in-fact broad discretion to act on your behalf, you might only want to give your attorney-in-fact the authority to act in a special matter or to only perform a specific task. One example is being able to cash checks for you, or having access to a specific account to pay specific bills and house expenses. That way, your power of attorney can perform certain tasks on your behalf, such as when you&rsquo;re traveling or living overseas in retirement so that you don&rsquo;t have to worry about them. Like other powers of attorney, you can terminate or change your attorney-in-fact at any time provided you are not incapacitated.&nbsp;
<h2>Springing Power of Attorney</h2>
This is a type of power of attorney that only applies when a condition precedent occurs; in other words, it springs into existence when certain enumerated facts happen. Frequently, durable powers of attorney can also be springing powers of attorney, such that they only become operative when you are incapacitated. For example, if you retire overseas and become incapacitated, the springing power of attorney will only come into effect at that time so that someone else can handle important financial and legal matters on your behalf &mdash; including potentially making arrangements to get you back to the United States. A springing power of attorney works when you&rsquo;re not traveling as well.&nbsp;
Now that you&rsquo;re familiar with the different types of wills and powers of attorney, it&rsquo;s time to ensure your estate has a beneficiary assigned. And remember - if you move, be sure to keep everything up to date with the correct address, along with your attorney-in-fact addresses as well.
<h4></h4>
<h4>SOURCES&nbsp;</h4>
<ol>
<li>&ldquo;5 Different Types of Power of Attorney.&rdquo; OneNotary, 30 July 2021, &nbsp;<a href="https://onenotary.us/poa-types/">https://onenotary.us/poa-types/</a>. Accessed 30 December 2025.</li>
</ol>

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
As you start your transition into retirement, it&rsquo;s a good idea to review your investment and savings accounts and make sure you have an assigned beneficiary for each where possible. When you add your beneficiary to your savings, CD or checking accounts, banks frequently call these types of accounts POD (pay on death) or TOD (transfer on death) accounts. If you&rsquo;re like most retirees, you probably have the bulk of your wealth in a tax-advantaged account, like a 401(k) or IRA. You might also have a Health Savings Account (HSA). It helps to make a list of all your accounts and review it closely, ensuring each one has a beneficiary assigned in the event of your death.
<h2>What is a Beneficiary?</h2>
Your beneficiary is someone listed on the account to receive your assets in the event that you pass away. When you have an assigned beneficiary (or beneficiaries), the assets you&rsquo;ve accumulated in the account automatically goes to your beneficiary, and avoids being distributed according to the terms of your will. If you die with just bank and investment accounts, assigning beneficiaries to your accounts is a more efficient way to distribute your assets.
<h2>How to Designate a Beneficiary</h2>
<ul>
<li>Make a list of all your investment accounts. This includes any retirement accounts from work, as well as any IRAs you have. Don&rsquo;t forget about HSAs and taxable investment accounts, as well as bank accounts and CDs. </li>
<li aria-level="1">Figure out which accounts can be combined. If you have multiple accounts, especially retirement accounts, combining them together during retirement can streamline your portfolio and finances. It also makes it easier to keep track of your assets, their performance and assign a beneficiary. You can also roll disparate HSAs into one account, as well as consolidate bank accounts.</li>
</ul>
<ul>
<li aria-level="1">Assign a beneficiary. Many accounts make this easy. Simply log in, and under your Profile section, check to see whether you have a beneficiary. If you don&rsquo;t, you can edit your account to add one. You can also call the account custodian to add a beneficiary. In many cases, you need the beneficiary&rsquo;s Social Security number and address to add them. </li>
<li aria-level="1">Review your beneficiaries regularly. Your beneficiary takes precedence over your will, so it&rsquo;s a good idea to review your beneficiaries and make changes as needed. If you divorce, you might not want your ex-spouse listed as your beneficiary on your account, since they will get the money &mdash; no matter what&rsquo;s listed in your will. And the same holds true in the event of the death of your spouse or one of your children; if this happens, you&rsquo;ll need to assign a different beneficiary to avoid having the account go to probate. As you have major life changes, check your beneficiaries and update as needed.</li>
</ul>

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
A trust is a type of relationship between you and another person (your trustee) who is legally charged with holding and protecting your assets for your benefit or the benefit of the people you chose (i.e., your beneficiaries). If you&rsquo;re concerned about legal action, or just to help you pass on your property without fuss, a trust can be useful.
While most people think of trusts as a vehicle for the very wealthy, anyone can benefit from a trust. They are administered and managed by a trustee, who can generally be a family member, close friend or bank, for the benefit of your beneficiaries. You can either direct the trustee to use his or her discretion to distribute some or all of the assets of the trust at various times or you can mandate when the trustee must pay out specific amounts to one or more of your beneficiaries.&nbsp;&nbsp;&nbsp;
However, it&rsquo;s important to note that when you put assets in the trust with a trustee, you no longer own them &mdash; the trustee does. The trust is listed as the title owner, and the assets are managed for the benefit of designated beneficiaries (you can be a beneficiary of your own trust). It is important to note that the law places very strict fiduciary responsibilities on the trustee to ensure that only the beneficiaries you designate can benefit from the assets you contributed to the trust.
When it comes to retirement, a trust can be useful because it can protect your assets in the event of a financial setback. Or, it can also help you manage your money effectively while you&rsquo;re alive while at the same time potentially passing your assets on without the messy probate process.
Often, trusts can help you better manage your tax situation in retirement &mdash; and even after you pass away. The goals of trusts vary according to the type of trust you choose, and why you&rsquo;re using it. Some common goals for trusts include:
<ul>
<li>Legal protection of your assets, including sheltering assets from beneficiaries&rsquo; creditors</li>
<li>Distribution of assets according to your requirements after you pass away</li>
<li>Distribution of hard-to-divide assets like RVs and vacation homes</li>
<li>Avoid probate and paperwork later</li>
<li>Reduce estate taxes or inheritance taxes, depending on the situation</li>
<li>Provide for children who have special needs</li>
<li>Flexibility in your asset management plan later</li>
</ul>
<h2>Revocable vs. Irrevocable Trust</h2>
When creating a trust during retirement, it&rsquo;s important to understand the difference between a revocable and irrevocable trust.
<h2>Revocable Trust</h2>
You can use this flexible type of trust during your lifetime. You can make changes while you&rsquo;re alive, depending on your goals in retirement and what makes sense for your long-term money management. As long as you&rsquo;re alive, the assets inside the trust continue to work for your benefit.
A revocable trust can help your loved ones avoid probate after your death, but there are no tax benefits associated with the account, nor does it protect your assets from creditors who might come knocking. It should be also noted that your revocable trust will become irrevocable when you die if not terminated before.
<h2>Irrevocable Trust</h2>
As you might expect, an irrevocable trust is less flexible than a revocable trust. Once you set it in motion and add assets, it can be extremely difficult to change. However, you get the benefits of asset protection and the assets aren&rsquo;t subject to estate tax. If you&rsquo;re single or in a non-married partnership, this type of trust can potentially put you at the mercy of someone else if you change your mind about the conditions of the trust. It can also be problematic if you&rsquo;re married and get divorced later. A knowledgeable estate attorney can help you review the conditions of the trust and build protections into the paperwork that creates the trust.
If the value of your estate exceeds $15 million in 2026 or $13.99 million in 20251 (the estate tax exemption), it can make sense to put the excess in an irrevocable trust, as those assets don&rsquo;t &ldquo;count&rdquo; toward your gross estate for federal estate tax purposes.&nbsp;
On top of that, assets in an irrevocable trust won&rsquo;t be included in government benefit calculations, such as those used to determine your Medicare IRMAA surcharges. Although $15 million is a lot of money today, Congress is always playing with this amount. Additionally, inflation can reduce buying power in the future. Being prepared can make a lot of sense.
<h2>Other Types of Trusts</h2>
As a retiree, you might be interested in other types of trusts, designed for specific purposes. The type of trust you choose might also depend on your children or grandchildren's needs.
When it comes to trusts, there are many types and variations designed to meet a specific need. Check with a knowledgeable estate planning attorney or accountant to determine if you can benefit from having such a trust as part of your estate plan.
<h2>Generation Skipping Trust</h2>
A generation-skipping trust2 is designed to benefit your grandchildren primarily. You can use this trust if you want to make sure your grandchildren receive an inheritance and you aren&rsquo;t sure about passing your assets to your children or the children of a second or third spouse. Additionally, this trust can be useful if you are divorced and want to make sure your children&rsquo;s children are taken care of.
<h2>Special Needs Trust&nbsp;</h2>
This type of trust is designed to primarily benefit family members that may have special needs (frequently a mental or physical disability). The assets held in trust for their benefit do not interfere with or make them ineligible for Social Security or Medicare. Special Needs Trusts can be a lifesaver to loved ones that may have difficulty caring for themselves but desperately need state help to pay for their expenses.
A Special Needs Trust is necessary to ensure that what you may want to give such a beneficiary merely supplements their life (enriches and comforts them) rather than supplanting their state benefits. If you are more concerned about a child getting what they need after your passing, this type of trust can be useful for ensuring that your assets don&rsquo;t automatically go to a surviving spouse or former spouse.&nbsp;&nbsp;

<h4>SOURCES</h4>
<ol>
<li>&ldquo;Estate Tax.&rdquo; IRS, 22 December 2025, <a href="https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax">https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax</a>. Accessed 23 December 2025.</li>
<li>&ldquo;A Guide to Generation Skipping Trusts (GST Trusts).&rdquo; Trust &amp; Will,&nbsp;<a href="https://trustandwill.com/learn/generation-skipping-trust">https://trustandwill.com/learn/generation-skipping-trust</a>. Accessed 23 December 2025.</li>
</ol>

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
Are you planning to move to a different state in retirement? Well, not only will you need to update your driver's license, but you&rsquo;ll also need to see if your move will impact your estate plan.
<ul>
<li>Establishing a domicile: You need to determine the residency requirements for taxes, including income and property taxes for the state. Additionally, check to find out if there are taxes levied by your new city or county.</li>
<li>Property titling: When you move to a new state, the titles associated with your property might not be recognized. Speak with an attorney to determine how you might need to title your property.</li>
<li>Irrevocable trust: Some trusts pay taxes, and by moving to a new state, even as a trustee, the trust might be subject to those state taxes. Find out ahead of time how the taxes on the trust work in your new state.</li>
<li>New home: As you get a new home in a new state, consider whether it should be added to a trust and what requirements there are to do so. You might also need to figure out how to title your home. If you have a partner you&rsquo;re not married to, make sure your home is designated &ldquo;joint tenancy with right of survivorship&rdquo; if you want it to pass on to them without issues.</li>
</ul>
<h2>Communal Property</h2>
As a divorcee, you might not be worried about moving to a community property state. However, if you decide to get married while living in a state that recognizes communal property, that could change your estate planning approach.1&nbsp;
<img src="https://cdn.buttercms.com/NX5sVEonQLO7Pmgiq70G">
Additionally, even just cohabitating with someone else can change the equation, even if you never have a romantic relationship. Ensure you understand occupancy rules in various states and what could be considered a &ldquo;common law marriage&rdquo; or other arrangement. Whenever you dissolve a long-standing partnership (marriage or otherwise), you risk the need to make major changes to your estate plan.
<h2>Power of Attorney</h2>
Finally, understand that moving to a different state2 in retirement can affect your power of attorney. Below are the states that now accept the Uniform Power of Attorney Act, which can bring the power of attorney with you:
<img src="https://cdn.buttercms.com/vxL9UR0cRzmsUgcJ11gt" alt="undefined">
Massachusetts is awaiting final approval for this measure as of 2025. If you move to states that don&rsquo;t accept the uniform approach, you might need to update your estate planning documents with a new name and address for someone to serve as your attorney-in-fact.

<h4>SOURCES</h4>
<ol>
<li>&ldquo;Community Property.&rdquo; Internal Revenue Service, December 2024, <a href="https://www.irs.gov/pub/irs-pdf/p555.pdf">https://www.irs.gov/pub/irs-pdf/p555.pdf</a>. Accessed 30 December 2025.</li>
<li>&ldquo;Understanding the Uniform Power of Attorney Act (UPOAA).&rdquo; LawDistrict, 20 August 2024,&nbsp;<a href="https://www.lawdistrict.com/articles/uniform-power-of-attorney-act-upoaa">https://www.lawdistrict.com/articles/uniform-power-of-attorney-act-upoaa</a>. Accessed 23 December 2025.</li>
</ol>

<h6 style="text-align: right;">Last Updated: June 10, 2026</h6>
As you plan for your estate, taxes are huge. They can reduce the value of the assets you pass on to your heirs and affect you while you&rsquo;re alive.
<h2>Gift Tax</h2>
Over the course of your lifetime, you can annually gift to each loved one $19,000 (in 2026)1 without paying a gift tax. It&rsquo;s important to note that the gift tax is paid by the giver, not the recipient. Before making a gift larger than the annual gift tax exclusion, you will want to consider other potential tax and reporting requirements.
For married people, it&rsquo;s possible to double what you give to others. When you have a joint tax return, you each can give $19,000 to a person. So, the total of the exemption rises to $38,000 in 2026. If you are concerned about reducing the total value of your estate, using gifts over time, as long as you stick to the annual limits, can be a way to keep it below the combined marriage estate exemption amount of $30 million.2
Beware of estate planning mistakes like joint ownership with someone other than a spouse. If you add someone else to a property, it could be considered a gift, and the equity they end up with could exceed the gift tax limit &mdash; causing tax headaches. Additionally, your home might then be open to the other person&rsquo;s creditors if they are a co-owner of the asset.
Also, if you gave a loan to a family member or friend, make sure that the loan was made with a written agreement, a fixed repayment schedule, and a minimum interest rate set by the IRS called the &ldquo;<a href="https://www.irs.gov/applicable-federal-rates">Applicable Federal Rate&rdquo;</a> so the IRS does not mistake it as a gift and charge you taxes on it.
<h2>Estate Tax</h2>
When you leave your loved ones your estate, the IRS allows $15 million per person in 2026, bringing the total for married couples to $30 million.3 The assumption is that your surviving spouse will retain the estate when you pass. As a result, anything that goes to your spouse won&rsquo;t be subject to federal estate taxes (state estate tax rules might be different).&nbsp;
Over time, and when your surviving spouse dies, you won&rsquo;t have had previous taxes reduce the amount that goes to your beneficiaries.
<h2>Qualified Charitable Distributions</h2>
If you have reached an age to take required minimum distributions (RMDs), you can use qualified charitable distributions to meet the criteria and reduce your taxable income. See our class on the SECURE Act 2.0 for updates to RMDs and other topics.
When you make a qualified charitable distribution (or QCD) from an affected retirement account, you don&rsquo;t have to worry about it counting as taxable income. This strategy pulls double duty by reducing your tax liability while helping you meet your RMD requirement. Using this strategy, you can donate up to $100,000 annually over your lifetime.4
<h2>State Taxes</h2>
Don&rsquo;t forget that each state has its own laws regarding estate planning and taxes. For example, in addition to federal estate taxes, some states, like Washington, Minnesota, Maine, and Vermont, among others, have their own estate taxes.5 Estate taxes are paid by your estate, coming off the top before your assets are distributed to your heirs. Usually, the exemption for state estate taxes is much lower than the federal exemption.
On top of separate estate taxes, five states &mdash; Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania &mdash; levy an inheritance tax.6 Inheritance taxes are paid by the recipient(s) of your estate and are based on the amount each beneficiary receives rather than being paid by your estate. Only Maryland levies both an estate tax and an inheritance tax.
Check with the state to see how your marital situation might impact your estate or inheritance taxes. In many cases, spouses don&rsquo;t have to worry about these taxes. However, if you&rsquo;re single or involved in a partnership that isn&rsquo;t recognized as marriage by your state, your heirs could end up stuck with these taxes &mdash; and receive less from your estate as a result.
If you decide to move to a state that has estate and/or inheritance taxes, you might need to adjust your planning. You can also find out if a trust can protect your estate in these states. Our class &ldquo;<a href="/retirement-school/taxes-on-inherited-accounts" rel="follow">Taxes on Inherited Accounts</a>&rdquo; offers more in-depth information.&nbsp;&nbsp;
<h2>Federal Taxes</h2>
When you die, the federal government levies an estate tax on your assets that you own in excess of $15 million (2026) in value.7 However, as a married couple, that amount increases to $30 million.
Any amount of the $15 million estate exemption you do not use can be given to your surviving spouse, who can add it to their estate tax exemption when they die. In other words, your estate tax exemption is &ldquo;portable&rdquo; to your surviving spouse. &nbsp;
For example, if you die and your portion of the estate is worth $14 million, that remaining $1 million can be added to your spouse&rsquo;s exemption, so your spouse&rsquo;s estate only has to pay taxes on amounts beyond $16 million. This allows you and your spouse to plan ahead. You might also be able to use certain types of trusts to help you reduce the amount owed in estate taxes.&nbsp;

<h4>SOURCES</h4>
<ol>
<li>&ldquo;IRS releases tax inflation adjustments for tax year 2026 Including Amendments from the One Big Beautiful Bill.&rdquo; IRS.gov, 9 October 2025, <a href="https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill" rel="follow">https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill</a>, &nbsp;Accessed 26 December 2025.</li>
<li>&ldquo;Estate Tax.&rdquo; IRS, 22 December 2025, <a href="https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax">https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax</a>. Accessed 26 December 2025.</li>
<li>Ibid.</li>
<li>&ldquo;Publication 590-B (2022), Distributions from Individual Retirement Arrangements (IRAs).&rdquo; IRS, 10 September 2024,&nbsp;<a href="https://www.irs.gov/publications/p590b#en_US_2020_publink100041439.">https://www.irs.gov/publications/p590b#en_US_2020_publink100041439.</a> Accessed 26 December 2025.</li>
<li>Loughead, Katherine. &ldquo;Estate and Inheritance Taxes by State, 2025.&rdquo; Tax Foundation, 28 October 2025, <a href="https://taxfoundation.org/data/all/state/estate-inheritance-taxes/">https://taxfoundation.org/data/all/state/estate-inheritance-taxes/</a>. Accessed 10 June 2026.</li>
<li>Ibid.</li>
<li>&ldquo;Estate Tax.&rdquo; IRS, 22 December 2025, <a href="https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax">https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax</a>. Accessed 26 December 2025.</li>
</ol>

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
As you plan for your estate, it&rsquo;s important to pay attention to recent changes that could affect the decisions you make about your assets.&nbsp;
<h2>SECURE Act</h2>
The SECURE Act changes some of the ways assets are passed on to your heirs. It&rsquo;s important to take this into account, especially when it comes to the way you pass your IRA on to your heirs.&nbsp;
The recent elimination of the stretch IRA has caused vast changes in the way your beneficiaries can benefit from the assets you choose to leave to them. Previously, they would have been allowed to spread out distributions across their lifetime. Now, though, they&rsquo;ll have only ten years to draw down the assets in the account.1 You can reduce the impact of potentially higher taxes on your heirs by considering the following actions:
<ul>
<li style="font-weight: 400;" aria-level="1">Make your spouse the first beneficiary. The change in legislation doesn&rsquo;t apply to a spouse, so they can use the stretch option not available to other beneficiaries.</li>
<li style="font-weight: 400;" aria-level="1">Convert your traditional IRA to a Roth IRA. A backdoor Roth conversion is a popular and crafty strategy that allows you to shelter your retirement accounts from future taxes. You&rsquo;ll take a tax hit up front though, so it&rsquo;s best to perform this type of conversion in a year where your income will take a hit, or in tandem with a large charitable contribution.&nbsp;</li>
</ul>
<h2>Digital Assets</h2>
In recent years, more of our lives are related to digital assets. Make sure that you figure out how your social media accounts will be handled and what will happen to digital assets like music and movies when you pass. Social media accounts can often be converted to memorial accounts, where people can leave remembrances. Additionally, be sure that you have the necessary passwords for things like e-commerce stores, online banks, and investment accounts. It may also be a good idea to share your email password with a trusted person so that when you pass, your beneficiaries or power of attorney can find and access them if needed.
<h4>SOURCES</h4>
<ol>
<li style="font-weight: 400;" aria-level="1">&ldquo;Retirement &nbsp;Topics - Beneficiary.&rdquo; IRS, 26 August 2025, <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary">https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary</a>. Accessed 30 December 2025.</li>
</ol>

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
Planning for your funeral, memorial service, or making other arrangements is part of estate planning. Your survivors will need to make these arrangements &mdash; and potentially pay for them. As you decide on final arrangements, consider the following:
<ul>
<li style="font-weight: 400;" aria-level="1">Whether you want to be cremated, buried, or have some other provision made.</li>
<li style="font-weight: 400;" aria-level="1">Your organ donor status.</li>
<li style="font-weight: 400;" aria-level="1">What type of funeral or memorial service you want.</li>
<li style="font-weight: 400;" aria-level="1">What type of casket, urn, headstone, or other container you need, depending on your wishes.</li>
<li style="font-weight: 400;" aria-level="1">Paperwork involved in your choices.</li>
<li style="font-weight: 400;" aria-level="1">Cost of various options and choices.</li>
</ul>
Some funeral homes offer you the option to prepay for your memorial service and can help you make all the arrangements ahead of time, increasing the chances that matters will unfold as you wish.
<h2>Life Insurance Death Benefit</h2>
Your life insurance death benefit can help your loved ones cover the costs associated with your final arrangements. Review your benefit to make sure it&rsquo;s large enough to cover your goals and smooth the way.
If you don't have insurance, consider getting a policy that&rsquo;s at least designed to cover the cost of your final arrangements.
<ul>
<li aria-level="1">Term life insurance only covers you for a specific amount of time and ends. It is generally cheaper, but your loved ones might lose the death benefit if you die after the policy term ends.</li>
<li aria-level="1">Permanent life insurance continues through your life, as long as you pay the premium. There are different types of permanent insurance, including universal life, policies that build cash value, and other types.</li>
</ul>
Carefully review your needs before choosing a life insurance policy. You can check out the Retirement School Life Insurance course for more information on what&rsquo;s available and how to choose.

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
As you prepare to enter retirement, here are some estate planning checklist items to consider. While all of the items below are important parts of your estate planning process, we&rsquo;ve split them into top priority and secondary priority tasks.&nbsp;
<h2>Top Priority Estate Planning Tasks:&nbsp;</h2>
<ul>
<li aria-level="1">Assign a beneficiary to your financial accounts. As you enter this new stage of life, make sure each account has a beneficiary to reduce the chance that your assets will end up in probate.</li>
<li aria-level="1">Select a power of attorney. Whether you need someone to handle your U.S. affairs if you retire out of the country, or if you&rsquo;re concerned about what could happen if you travel, having a power of attorney can help make sure your financial and legal matters are taken care of.</li>
<li aria-level="1">Draw up (or update) your will. Make sure your loved ones understand your wishes. If you already have a will, review it to see if it still applies to your new retirement situation.</li>
</ul>
<h2>Secondary Priority Estate Planning Tasks:</h2>
<ul>
<li aria-level="1">Prepare for state-specific laws if you plan to move. Consult with a legal advisor if you plan to move in retirement to see if the new state has any specific estate planning laws you should be aware of.</li>
<li aria-level="1">Consider an advance healthcare directive. While in retirement, you won&rsquo;t know what&rsquo;s next, so having a living will to share your instructions if you become medically incapacitated is important.</li>
<li aria-level="1">Set up a trust if you want one. Now that you&rsquo;re consolidating retirement accounts and reviewing your long-term retirement financial planning, setting up a trust might make sense. If you want a trust, work with a professional to create the right trust for your circumstances.</li>
<li aria-level="1">Take inventory and assign ownership of major items. As you get ready to move house during retirement, or even if you&rsquo;re seeing where you stand, list out the main items of importance to you and decide who should get them.</li>
<li aria-level="1">Make final arrangement plans. Review funeral and memorial plans, as well as consider how these items will be paid for.</li>
<li aria-level="1">Discuss your plans with family members. Your loved ones should know your wishes so they aren&rsquo;t caught by surprise.</li>
<li aria-level="1">Review your estate and beneficiaries regularly. Consider reviewing your information every year or two, and after any major life event. This is important during retirement, as the situation can change quickly.</li>
</ul>

<h6 style="text-align: right;">Last Updated: December 30, 2025</h6>
Estate planning should be a crucial part of your overall&nbsp; retirement planning process, as it can help ensure a smooth transition. Additionally, the right plan can ensure that you have enough assets to last you through retirement, along with leaving a legacy for your heirs.
<ul>
<li style="font-weight: 400;" aria-level="1">Share your wishes with your loved ones so there&rsquo;s no doubt about how they should proceed.</li>
<li style="font-weight: 400;" aria-level="1">Create the right documents and systems, including wills and trusts, to help you pass on your assets with as little inconvenience as possible.</li>
<li style="font-weight: 400;" aria-level="1">Consult with tax professionals to help you reduce the chance that the value of your assets will be reduced through taxation.</li>
<li style="font-weight: 400;" aria-level="1">Regularly review your estate plan to ensure that it&rsquo;s up-to-date with changes to rules and regulations, as well as to changes in your life.</li>
</ul>
If your situation is relatively simple, it&rsquo;s possible to digitally do-it-yourself, with help from popular will or trust making websites. The more complicated things get, though, the more you&rsquo;re likely to benefit from paying for an estate planning attorney.&nbsp;
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About this Class

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Scenario Planning Category

Estate Planning 101

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