People often make the mistake of thinking they do not need an estate plan until they have reached a certain age or have a certain amount of money in the bank. This simply is not the case as there are documents which you are well-advised to have in place as early as when you gain independence from your parents in your 20s.
The complexity of estate planning varies by age range, but it’s never too early to educate yourself on the various legal and financial aspects to include. The question of what you should have covered will evolve over the years, from something quite simple in your 20s or 30s to a fully funded trust plan in your 70s.
Stage of life is only one of the factors that an estate planning attorney will address when creating a plan that suits your needs. Other individual aspects, such as your family situation, personal goals, and tax considerations, will also come into play. Estate plans are personalized based on income level and revisited when changes occur.
Where to start
As you age, there are specific legal documents and estate planning tools that you’ll want to consider. The following is a list of documents recommended for people to put in place by decade. This list highlights the importance of meeting with your attorney on a regular basis to update and/or add to your estate plan.
Healthcare Directive: This document details legal instructions regarding your preferences for medical care if you are unable to make decisions.
Power of Attorney: The purpose of this document is to name someone to make health and financial decisions for you if you’re unable to do so yourself.
Will: Wills specify who will inherit your assets, be in charge of settling your estate, and care for your children if necessary. Wills, however, usually cause the estate to go through probate, which can be expensive and time consuming. Creating a Living Trust can be a much better alternative.
Trust: Trusts transfer ownership of your assets to your designated trustee, and there are many distinct types of trusts of which to take advantage. A good estate planning attorney can help you decide which is best for your personal needs.
At this point, it’s time to speak with your parents about their estate plan and desires for the future as they age. Have them share their power of attorney and healthcare directive with you so you can help ensure their wishes are followed as they move into their golden years. Find out how they would like to address long-term care, should they need it.
50s-70s and beyond:
Hopefully, you have all of your ducks in a row by this age, but don’t feel badly if you haven’t completed all of this. Surveys have revealed that more than four out of ten adults in their 50s in the U.S. are in the same position. But it is time to act on these recommendations.
It’s not too late
If you’re part of the 40% who have yet to engage in estate planning, take the time to contact an attorney and talk about what you should have in place based on your personal situation. While it’s ideal to keep up with estate planning by age, it’s never too late to start.
People with great personal wealth need to address the issues discussed above and more with attorneys who specialize in the area of estate planning for high net worth individuals. You can click here if you’re interested in learning more about creating an ultra-high net worth legacy plan.