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Social Security and Estate Planning Challenges

Posted on in Estate Execution

Essential to securing your future and the future of family that you might leave behind is planning your estate. Most financial planners say that the biggest surprises to those planning their estates, is whether or not a surviving spouse will lose income. If your spouse doesn't have enough to live on then all your plans can be reversed.

"One thing people don't plan for is the reduction of income if a spouse or partner dies," says certified financial planner Kathy Hankard, of Fiscal Fitness, in Verona, Wis. If a couple is both living off of social security benefits, the income of a household has decreased by as much as 35%. Oftentimes, the loss of a partner only results in a 10 % decrease in living expense. Surviving spouses can pick which benefits are greater but they still have their total benefits decreased from two benefits to one.

There are options available to those looking to avoid this potential pitfall. There is a strategy that involves delaying the payments of benefits in order to increase the potential income for any survivors. The higher-earning spouse can refrain from taking their benefits can translate into an 8% in credits for each year up until age 70. When that person dies, the survivor can start receiving a benefit of 100% of the deceased spouse's benefit with the credit and a cost of living adjustment.

Estate planning is by definition in place to secure the division of an estate. By carefully planning, taxes can be avoided and challenges can be eliminated. No advice can benefit you more than the personalized legal counsel of a dedicated DuPage County estate planning lawyer. Please contact them today to alleviate any surprises from the execution of your final requests.

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