What's the Right Age to Start Estate Planning?
One of the most common misconceptions about estate planning is that it is something only wealthy or elderly people need to worry about. The truth is that there is no single “right” age to start estate planning, but there are clear signs that the time has come. If any of the following apply to you, it is time to talk to an estate planning attorney.
You Have a Savings Account
If you have accumulated any savings at all, you have something worth protecting. It does not matter whether it is a few thousand dollars or a few hundred thousand. Without a plan in place, there is no guarantee that your savings will go to the people you want to have them.
A simple will can specify who receives your savings when you pass away. A durable power of attorney can ensure someone you trust can manage your finances if you become incapacitated. These basic documents provide essential protections that everyone with any savings should have.
Even if you are young and healthy, unexpected events happen. An accident or sudden illness can leave you unable to manage your own affairs. Having basic estate planning documents in place ensures that someone you trust, rather than a court-appointed stranger, will manage your money and make decisions on your behalf.
You Recently Got Married or Divorced
Marriage and divorce are two of the most significant estate planning triggers. When you get married, you take on new responsibilities and your family structure changes. You may want to ensure that your spouse inherits your assets, or you may need to address how assets from a prior relationship are handled.
When you get married, you should update or create a will that reflects your new family situation, review and update beneficiary designations on retirement accounts and life insurance policies, consider whether you need a trust to protect assets or provide for children from a prior marriage, and create or update your powers of attorney and health care directives to include your new spouse.
Divorce is equally important from an estate planning perspective. In many states, divorce automatically revokes provisions in your will that benefit your former spouse, but this is not true in every state, and it does not affect beneficiary designations on retirement accounts and insurance policies. Failing to update these documents after a divorce can result in your ex-spouse inheriting assets you intended for someone else.
After a divorce, you should create a new will, update all beneficiary designations, revoke any powers of attorney that name your former spouse, and create new health care directives. Do not assume that the divorce itself takes care of these issues.
You Have Assets Over $100,000
Once your total assets exceed $100,000, including the equity in your home, retirement accounts, savings, and other investments, you have a meaningful estate that warrants professional planning. At this level, a simple will may not be sufficient, and you should consider whether a trust or other planning strategies are appropriate.
Assets over $100,000 also raise questions about potential estate taxes, asset protection, and how to efficiently transfer wealth to the next generation. An estate planning attorney can help you evaluate your options and create a plan that minimizes taxes, avoids probate where possible, and ensures your assets are distributed according to your wishes.
You Want to Travel
If you enjoy traveling, especially internationally, having an estate plan in place is important. Being away from home for extended periods creates risk. If something happens to you while you are traveling, your family needs to be able to access your finances and make decisions on your behalf.
A durable power of attorney allows someone to manage your financial affairs while you are away or if something happens to you during your trip. A health care power of attorney ensures that someone can make medical decisions if you are injured or become ill in another country. A will ensures that your assets are distributed according to your wishes if the worst happens.
Traveling without these documents in place can leave your family in a difficult and potentially expensive situation. Take the time to get your estate plan in order before your next trip.
You Own Property
Owning real estate is one of the strongest indicators that you need an estate plan. Real property that is not properly planned for can create significant headaches for your heirs. Without a plan, your property will go through probate, which can be time-consuming and costly.
If you own your home, consider whether it should be titled in the name of a trust to avoid probate. If you own rental properties or other real estate investments, your estate plan should address how those properties will be managed and who will inherit them.
Property in multiple states can create particular complications, as each state may require a separate probate proceeding. A properly funded trust can avoid this problem by keeping your properties out of probate entirely.
The right age to start estate planning is now. Regardless of your age, if any of these situations apply to you, you owe it to yourself and your family to put a plan in place. Estate planning is not about predicting when you will die. It is about being prepared for whatever life throws your way.
Contact our office today to schedule a consultation and get started on your estate plan.
