Many people correctly think of benefits for seniors as including retirement accounts and Social Security benefits, but few carefully consider how to incorporate all available elder benefits into their retirement plans. This blog is the first in a series of five outlining basic types of elder benefits to consider in establishing a comprehensive retirement plan. The first blog covers the importance of including employment benefits in your estate planning. The remaining blogs in the series cover other essential elements to be included in your overall retirement plan:
Government retirement benefits;
Government disability benefits;
Government healthcare benefits; and
Identifying and Including Employment Benefits in Your Estate Planning Arsenal
An estate plan is a critical but sometimes overlooked part of overall financial planning. Having a comprehensive estate plan gives you and your family peace of mind that the transfer of your assets won’t be one of the things your family will need to worry about after your passing.
Because many people plan for retirement using employment benefits, the same benefits often also play a key role in estate planning. Correctly identifying and incorporating all of your available employee benefits in your estate plan are crucial to creating a successful succession plan for your estate.
Create a Comprehensive List of Your Employment Benefits in Your Estate Planning Process
Employment benefits can span a wide array of financial accounts. Obvious on the list are retirement accounts. The West Virginia Public Employees Retirement Systems (PERS) is an example of a defined benefit plan, where the benefits paid upon retirement are based on the length of employment and salary history. The West Virginia Retirement Plus program is an example of a defined contribution plan, where the benefits paid upon retirement are based on employee contributions and their earnings. Whether defined benefit or defined contribution plans, retirement accounts are one of the feature benefits many employers offer.
Some employers also offer other benefits that may be transferable to or otherwise benefit your family upon your death:
Continuing healthcare insurance beyond retirement or death;
Work with your employer to identify all of your employment benefits, and then work with your financial advisor or past employers to identify benefits you may still have from past employment.
Develop a Big Picture of Your Overall Estate
After you compile a complete list of your employment benefits, work with your financial advisor or accountant to determine each asset’s current and prospective values as well as any tax consequences of transferring your employment benefits. The tax consequences depend on the state and federal laws in effect at the time of the transfer. Although employee retirement benefits often pass outside of probate, the tax consequences of that transfer and others may shape how and to whom you choose to pass on a particular asset.
Once you have a complete inventory of your transferable assets and their values, share that big picture with your West Virginia estate planning attorney to discuss how to distribute your estate to your various beneficiaries.
Designate Beneficiaries for Your Employment Benefits
In many cases, employment benefits transfer outside of probate, usually by direct transfer to a named beneficiary. Consult with your estate planning attorney to determine the recipient of each employee retirement account or other work-related benefit. After you have identified the intended beneficiary of each work-related assets, contact your past and current employer’s benefits administrators to file the paperwork necessary to name or update those beneficiary designations.
Even after you file beneficiary designations for all your employment benefits, the task is not complete. As time passes, account values may change. Calendar to consult with your financial advisor or accountant and your estate planning attorney to review and update your estate plan as needed every few years or at milestone events such as retirement, the date your start drawing Social Security benefits, or when you have a significant change in your financial circumstances.
Do You Need Help Identifying or Reviewing Employment Benefits in Your Estate Planning?
Do you know whether you have considered all of your employment benefits in your estate planning? Anna M. Price, a seasoned West Virginia estate planning attorney, can work with your financial advisor or accountant to make sure you have all your employment benefit bases covered. To learn more about estate planning in West Virginia and how to identify all of your employment benefits or for a more complete overview of benefits for seniors, contact Anna at Jenkins Fenstermaker, PLLC by calling toll-free 866.617.4736 or by emailing her on the firm’s contact form.