With the New Year rapidly approaching, Miramontes Capital has put together a few suggested retirement resolutions for those of you who want retirement planning to be your area of improvement for 2016.
This resolution comes from a goal many of my clients express. They don’t want to burden their spouse or heirs with financial concerns that come from unpaid debts or reduced inheritance from taxes. For individuals who have already done a decent amount of planning to ensure that their own retirement is provided for, the next progressive step may be turning to your legacy, to what you’ll be leaving your loved ones.
Debt:
One factor that can certainly compromise passing wealth on to your heirs is debt. If your loved ones have to go about selling properties or other assets to cover other debts—or worse, if they’re stuck with monthly payments, not only are you minimizing the effectiveness of your wealth, but you’re leaving your loved ones with a burden as well.
Taxes:
Another complication we’d prefer to not face, taxes are an unavoidable aspect of retirement planning. Depending on where you live and your tax bracket, thousands and thousands of dollars you had intended for your heirs could go to Uncle Sam instead.
And so, if the situation described sounds like it applies to you, this year’s resolution could be, “I resolve to take steps to make sure that I protect the wealth that my heirs will inherit.” There are a variety of ways to do this, but one common strategy I often recommend to clients, depending on their situation, is utilizing a life insurance policy. There’s a wide range of flexibility in the type of life insurance products one can purchase, allowing you to take out a policy that can fit your needs. Say you have a mortgage, plus other debts totaling $250,000. Rather than having to shuffle around assets to cover this, taking out a policy in that amount can be a great way to simplify things for your heirs. In the same way, you can use a policy to completely cover the tax burden on your estate, ensuring that your money gets where you had intended it to go.
We at Miramontes Capital wish you a happy New Year, and commend you on proactively thinking about your retirement. With retirement planning, everything depends on your situation. Decisions like taking out a life insurance policy should only be made after careful planning. If you find yourself in need of some guidance in the process as you make your resolution this year, don’t hesitate to give us a call.