Estate planning is for everyone. So long you are above 18, you have the legal right to lay down instructions that must be carried out should anything happen to you.
But to be frank, the kind of plans you put in place at age 20 are not expected to be the same as what you put down at 60, when you have a spouse, children and property in your name.
In this article, we shall be discussing different estate planning strategies at different ages — or phases — of your life.
Estate planning when you are young and unmarried
As a young single man or woman probably with a job, you are in the early phase of your financial life. You should have some basic plan in place such as a:
- Will: To decide who your current assets (no matter how small) will go to should anything happen to you. Since you’re yet unmarried, your beneficiary could be your sibling or parent(s) as you so desire.
- Power of attorney: to transfer authority to an agent to make financial or medical decisions on your behalf if you become unable to make them yourself.
- Advance healthcare directive: to give instructions for medical care during an end of life situation.
If everyone knows this, why then do we have almost no young individual doing estate planning? It is simple: they don’t believe they have enough assets to make a plan. They are simply overlooking certain assets.
You possibly have life insurance and car insurance policies. These are assets and their proceeds will be disbursed when the need arises. Hence, you need to specify who you’d prefer them to go to.
But that’s not all. The definition of estate planning goes to show that it is not all about asset distribution but it also has to do with healthcare and well-being during incapacity. You may expect any member of your family to assume responsibility when you fall critically ill, but how sure are you that the right person would be in charge? For someone to even assume responsibility for an incapacitated adult, a guardianship proceeding will be required, and this process is one of the most expensive in elder law. By carrying out estate planning, you would be avoiding unnecessary expenses.
Estate planning in early marriage
The moment you sign those papers and tie the knot, you enter a new phase of your life. Now, your newly acquired property may automatically become jointly owned with your spouse. But in the event something happens to you, would you want everything to go to your spouse just like that? What if you had wanted some to go to your parents? Or what if both husband and wife are involved in a ghastly motor accident? What becomes of their properties? What becomes of their healthcare if luckily one or both survived?
It becomes paramount that you put plans in place to allocate properties and document your wishes individually.
You should review property ownership by joint tenancy, designated beneficiaries for your payable on death account, life insurance, and retirement account to enable effectual asset transfer if the unexpected happens unduly.
When you have minors
At the very moment you become a parent, you enter another phase of your life. You now have a child to care for. Your death or a sudden illness can render you unavailable to see the welfare of your children. It becomes essential that you put adequate plans in place for their upkeep in form of guardianship.
Your minors (children below 18) cannot inherit whatever you leave for them, so you have to name a guardian to manage the assets for them until they come of age.
Rather than creating just a simple will, in this stage of your life, you should create either a child trust or a will with testamentary trust provisions. In the will, you can make provision to appoint a guardian for their physical placement, and a guardian for their financial and/or medical well-being.
On the other hand, the trustee of your living trust will step in to manage your children’s entire well-being.
Under 60 with both adult children and minors
At this age, you have to make plans for distribution of assets to both your adult children and minors. As you already know, different plans must be put in place because both categories can’t inherit the same way. You should consider your minors by creating a trust or guardianship, whereas you can address your adult children in a simple will.
Now you’re at the last stage of estate planning. You are well into retirement and looking towards your final days. Ensure you have a living trust working alone or alongside a will, a power of attorney, and healthcare directive. Your living trust would help to avoid probate and reduce cost of asset transfer. It will also contain provisions for the distribution of your assets to your survivors.
If you have an adult child with special needs, special provisions in form of special needs trusts should be made.
Get help from an estate planning attorney near you
Estate planning is complicated. At each age of your life, there are so many things to consider and each person’s case is unique. Your estate plan at 40 and married will be different from another 40-year old in a blended family. To ensure you get things right, kindly speak with an estate planning for professional guidance.