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Lifecycle

Estate and Legacy

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Estate and Legacy

The decisions you make in retirement extend beyond your lifetime. The structure of your accounts, the names on your beneficiary designations, the documents you leave behind—these shape what happens to your wealth after you die. For many retirees, legacy planning is as important as retirement income planning. It determines whether your heirs inherit your wealth tax-efficiently, whether your intentions are clearly documented, and whether your family avoids expensive probate proceedings or court battles over your care.

Estate and legacy planning is not only for the wealthy. Even a modest portfolio of $500,000 or $1 million triggers important tax consequences and operational decisions if not structured thoughtfully. A beneficiary designation mistakenly left from a prior marriage, an IRA with no named beneficiary, or a failure to update your will after a major life event can derail your intentions and trigger unintended tax bills for your heirs.

The Rules Have Changed​

For many years, a strategy called the "stretch IRA" allowed beneficiaries to inherit an individual retirement account and withdraw it slowly over their own lifetime, deferring taxes and preserving growth for decades. The SECURE Act of 2019 largely eliminated this option for most inheritors, compressing the timeline for distributions to ten years. This shift has profound implications for retirees with substantial IRAs, and it has made strategic planning during retirement—including deliberate Roth conversions—more valuable than before.

Simultaneously, step-up in basis—the automatic increase in the cost basis of assets inherited from a deceased person—has become a critical tax consideration. A retiree holding appreciated stocks can leave those stocks to heirs, who inherit them at their stepped-up value with no capital gains tax due. That same retiree, if forced to sell appreciated assets during retirement for income, pays capital gains tax immediately and loses that tax benefit. Understanding the interplay between these rules shapes both your spending and giving strategy during retirement.

Planning Across Decades​

The articles in this chapter address the core documents and decisions: the will that directs who receives what, beneficiary designations on retirement and investment accounts, revocable living trusts that avoid probate, powers of attorney for financial and healthcare decisions, and the decisions you make about which account types to leave to which heirs. You will also explore how the SECURE Act reshaped inherited IRA strategy, how charitable giving during retirement can reduce taxes while supporting causes you care about, and how to structure your legacy plan to reflect your values while minimizing taxes and family conflict. The goal is a coherent plan that reflects your wishes, protects your heirs, and leaves less to chance and courts.

Articles in this chapter​