Dear Friend,

If you’re fortunate enough to have a pension, congratulations. You’ve worked hard, planned for retirement, and secured a reliable income stream for your golden years. But here’s the big question: Have you thought about what happens to your pension if something happens to you?

Most people don’t realize that pensions, while a fantastic resource, can create significant complications for your loved ones if you don’t have an estate plan. Without a proper plan, the money you worked so hard to earn could end up in the wrong hands, stuck in legal limbo, or even disappear entirely.

Let me explain why people with pensions need an estate plan and how to ensure that your hard-earned money benefits the people you love most.

The Problem with “Set It and Forget It” Thinking

Many people think of pensions as “automatic.” The checks come in, the bills get paid, and everything is fine. But what happens if you’re no longer around? Most pensions don’t automatically transfer to your spouse or children. Some pensions stop paying entirely upon your death, while others provide limited benefits unless you’ve taken specific steps to protect them.

Here’s a common example: Jim worked 35 years for the city and retired with a generous pension. He chose the “single life” payout option to receive the maximum monthly benefit, thinking it was the best way to support his family. But when Jim unexpectedly passed away, the payments stopped. His wife, Karen, was left with no income, no plan, and a financial disaster.

This is the kind of nightmare scenario estate planning can prevent. Let’s break it down.

Key Reasons You Need an Estate Plan if You Have a Pension

  1. Protecting Your Spouse or Partner

If you’re married or have a long-term partner, you probably assume they’ll be taken care of if something happens to you. But that’s not always the case. Many pension plans offer different payout options, such as:

  • Single Life Option: Pays the highest monthly benefit but stops entirely upon your death.
  • Joint and Survivor Option: Provides a reduced monthly benefit but continues payments to your spouse after you’re gone.

Choosing the wrong option without considering long-term consequences can leave your spouse in financial jeopardy. An estate plan ensures your spouse has the resources they need, whether through continued pension benefits, life insurance, or other financial tools.

  1. Naming Beneficiaries and Avoiding Probate

Some pensions allow you to name beneficiaries, but others don’t. Even if your plan does, naming a beneficiary isn’t enough. Without an estate plan, your assets may still go through probate—a lengthy, expensive process that could delay your family’s access to funds when they need them most.

Imagine your loved ones waiting months or even years to access the pension benefits you intended for them. Proper estate planning avoids this by creating tools like a trust, which keeps your assets out of probate and ensures they’re distributed quickly and efficiently.

  1. Providing for Minor Children

If you have children under 18, the stakes are even higher. Without an estate plan, your pension and other assets could be tied up in legal red tape, leaving your children without the financial support they need.

Worse yet, the court could appoint a guardian to manage those funds—someone you might not have chosen. With an estate plan, you can:

  • Designate a guardian for your children.
  • Set up a trust to manage pension benefits and other assets for their care.
  • Ensure the money is used responsibly for their upbringing, education, and future.
  1. Reducing Taxes and Maximizing Benefits

Did you know that your pension benefits might be subject to taxes when passed to your heirs? Without a plan, your family could lose a significant portion of their inheritance to Uncle Sam. An estate plan uses strategies like trusts and other financial tools to minimize taxes and maximize the benefits your family receives.

For example, setting up a “spousal rollover” for retirement accounts or using a charitable remainder trust can preserve more of your wealth for the people you love while reducing the tax burden.

What Happens Without an Estate Plan?

Let me share another story. Linda was a retired teacher with a pension and no estate plan. She assumed her two adult children would “figure it out” when she was gone. But when Linda passed unexpectedly, her pension benefits stopped, and her children were left scrambling. Because there was no plan, her estate went to probate. Legal fees and taxes ate up much of what she’d saved, and her children received only a fraction of what she intended.

This is the reality for countless families—but it doesn’t have to be yours.

How to Protect What’s Yours

An estate plan is more than just a will. It’s a comprehensive strategy to protect your pension, assets, and family from uncertainty. Every day without an estate plan is a day you’re gambling with your family’s financial security. Your pension is a valuable resource, but without proper planning, it could disappear when your family needs it most.

Let’s work together to create a plan that protects what you’ve earned and ensures your loved ones are taken care of—no matter what. Call my office at 770-285-5493 to schedule a consultation. The sooner we start, the sooner you’ll have peace of mind knowing your family’s future is secure.

Sincerely and Thanks,

Mike

Mike Bascom

Bascom Law, PC

Estate Planning & Elder Law