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When Should You Begin Estate Planning?

An elderly couple going over their legal files with an attorney.

Estate planning is a necessary process that safeguards your assets and ensures your wishes are carried out after you pass away. However, many people put off estate planning, assuming they can do it later in life.

The truth is, there's no perfect time to start planning for your estate, but there are certain milestones and events that should prompt you to begin the process. Checkett, Pauly, Bay & Morgan discuss the question many people ask: "When should you start estate planning?"

Understanding the Basics of Estate Planning

Estate planning is a process involving the creation, management, and distribution of an individual's assets in the event of incapacitation or death. It encompasses various elements, including wills, trusts, health care directives, and powers of attorney. Each part is crucial in safeguarding an individual's financial security and ensuring their wishes are honored.

A will provides instructions on how your belongings should be distributed.
A trust can help manage your assets during and after your lifetime.
Health care directives outline an individual's medical wishes in case they can no longer communicate those wishes to their family.
Powers of attorney designate an individual to make decisions on your behalf should you become unable to do so yourself.

Together, these tools form the foundation of a robust estate plan designed to minimize taxes, avoid probate, and protect beneficiaries.

The Ideal Age to Start Your Estate Planning

The notion of an "ideal age" for starting estate planning is somewhat misleading, as the right time varies for each individual based on their life circumstances. However, a general guideline is to begin estate planning in your mid-twenties to early thirties or whenever you start accumulating assets or have dependents.

This early start does not mean your estate plan will be complex or extensive. Initially, it may involve drafting an essential will and appointing a power of attorney. The primary goal at this stage is to establish a solid foundation that can be built upon and revised as your life evolves.

As you acquire more assets, enter into marriage, have children, or start a business, your estate planning needs will become more complex, and you can add to your existing plan.

Life Events that Need Estate Planning

Several life events are critical triggers for initiating or updating your estate planning efforts.

Marriage is a significant milestone that often necessitates the inclusion of your spouse in your current estate plan.
The birth or adoption of a child introduces the need for guardianship considerations and the protection of their future.
Buying a home or other substantial assets can also prompt a reevaluation of your estate plan to ensure these assets are properly managed and distributed.
Another crucial event is the start or expansion of a business, which requires strategies to safeguard your professional legacy and ensure smooth succession planning.
Receiving an inheritance may significantly alter your financial landscape, necessitating adjustments to your estate planning to account for the increased assets.
Health diagnoses or the onset of chronic conditions are also pivotal moments, as they often require updates to health care directives and living wills to reflect your care preferences.

Each of these life events offers a unique opportunity to ensure your estate plan accurately reflects your current circumstances and wishes, highlighting the dynamic nature of estate planning as an essential tool for personal and financial security.

The Risks of Delaying Estate Planning

Delaying estate planning can have significant and sometimes irreversible consequences.

Without a clear plan, your belongings may be distributed according to state laws. This oversight can lead to potential conflicts among heirs, prolonging the distribution process and possibly resulting in legal battles that can erode the value of your estate.

For parents of minor children, failing to appoint a guardian can mean that the decision of who will care for your children if you cannot will be left to the courts.

The absence of health care directives and powers of attorney can also place a tremendous emotional and financial strain on family members, who may be forced to make stressful decisions without guidance. Lacking a proper estate plan can also expose your estate to unnecessary taxes and fees, diminishing the legacy you intend to leave behind.

How to Begin the Estate Planning Process

Starting the estate planning process may seem like a daunting task, but breaking it down into manageable steps can simplify the journey.

First, gather essential documents and information, including a list of your assets (like bank accounts, real estate, and investments) and significant liabilities.
Next, consider your goals for asset distribution, care directives, and guardianship for dependents, if applicable. An experienced estate planning attorney is invaluable at this stage. These professionals can provide guidance and help draft necessary documents such as wills, trusts, and powers of attorney.
Discuss your plans with family members or chosen representatives to ensure clarity and prevent surprises.
Remember, estate planning is not a "set it and forget it" process. Regularly revisiting and updating your estate plan in response to life changes or legal shifts ensures it always aligns with your current wishes and circumstances.

These initial steps will set a strong foundation for your estate planning efforts, ensuring your legacy and loved ones are well protected.