Retirement Planning & Trusts

For many families retirement planning is a critical part of estate planning. Anecdotally, retirement plans often comprise 20-30% of client assets. The choices clients make are critical to the futures of their loved ones.

For Defined Benefit Plans (Company Sponsored Pensions) the typical choices are basically: 1) a pension for a single life expectancy, 2) a lower pension for a joint life expectancy, or 3) a lump sum at retirement.

For Defined Benefit Plans (i.e. 401K’s, 403b’s and IRA) there are fundamentally eight choices. The two most common are by beneficiary designation to: 1) surviving spouse, and 2) non spouse beneficiaries (most often children and/or grandchildren). Decisions regarding choices are often affected by family issues (second/third marriages), beneficiary issues (special needs, spending history) and tax deferral opportunities.

Specialized (accumulation) trusts may be used to address these issues. The recent Secure Act, effective January 1, 2020, with certain exceptions limits tax deferral (stretch out) for non-spouse beneficiaries to ten years.

Retirement planning is a complex topic beyond the scope of this short article. The experienced attorneys at Davis Schilken, P.C. are available to discuss retirement planning strategies. They may be contacted at (303) 670-9855.