Estate planning is neither just for the wealthy nor those nearing retirement. Planning your estate is something that everyone needs to do, and it's highly recommended to begin the process as early as possible.
Estate planning allows you to decide not only who will inherit your assets and property but who will make the necessary financial and medical decisions in your stead in the event that you become incapacitated.
Just as your wealth will fluctuate over time, your planning needs will change over the course of your lifetime. This article will cover the appropriate estate planning tips to ensure you are on top of things and avoid any legal issues and other headaches down the line.
Our latest GUIDE TO ESTATE PLANNING has answers to many Texas estate planning questions!
FROM 18 YEARS OLD AND INTO YOUR 20s
Though it is highly unlikely that you will have amassed a substantial amount of wealth and assets at 18 years old, some notable changes occur relevant to your estate planning needs. Upon turning 18, your parents are no longer granted the authority to make any health care or financial decisions in your name. Visiting a law firm and establishing a healthcare directive and your powers of attorney is advisable.
A healthcare directive will establish what actions will be taken regarding your health if you become incapacitated and who will make them.
A durable power of attorney will make decisions on your behalf if you cannot. There are many different types, from medical power of attorney to financial power of attorney.
When you are young, you are still building your wealth and assets. You most likely don’t have a family yet and have not built any substantial wealth. As you get older and establish these, they will become a much bigger priority, but when you are young and starting out, the most important aspects to consider are going to be your healthcare directive and healthcare power of attorney.
INTO YOUR 30s
Once you hit your 30s, you likely have started a family, possibly own a home, and have begun to grow your financial portfolio. Now is a good time to revisit your estate plan and begin to consider protecting your spouse and children in the event you pass or become incapacitated.
Wills and living trusts are tremendous estate planning tools. A will establishes who inherits your assets, settles your estate, and even who will care for your children in the event that you and your spouse both pass away. A trust simply transfers ownership of your assets to a person of your choice and establishes who will manage your assets for your designated beneficiaries.
Trusts have a wide variety of purposes, from real estate to investment accounts. They can also be set up in many different ways. Visit an advisory firm and consult with a lawyer for the right legal advice on how to set up the right kind of trust for your situation and needs.
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INTO YOUR 40s
While not everyone will begin estate planning in their 30s or early, by the time you hit 40 years old, it's time to kick things in gear.
For those who are not just beginning at age 40, it's time to revisit your estate plan and ensure that everything is still set in motion to carry out your wishes. Estate plans are living documents that will change over time, just as your life around you changes. Your wealth will fluctuate, you will have children, they will grow up and leave the nest, and you may also experience divorce and death. All of these are significant life events that warrant a revisiting of your estate plan, as they may necessitate changes.
As you get older, keep your own parents in mind too. Check on their estate plan and see that they have everything in order and how it relates to you and your financial situation, if at all. This can provide relevant information for your own retirement and financial planning. You should also find out how they plan on medical decisions to be made in the event they are incapacitated.
INTO YOUR 50s & BEYOND
If you have yet to begin estate planning, it’s not too late, but it is certainly much more urgent. The earlier you begin, the easier it is to handle and the more time you have to prepare. It is much easier to make small adjustments to an estate plan throughout your life than it is to scramble and create one under pressure in your 50s and 60s. The estate planning and probate process is much smoother for both you and your loved ones when you have clear instructions on how you want things handled after you pass. If you leave it to the state, it is unlikely that you would approve of how they handle things. Having your estate plan tight and maintained allows you to focus on more important matters at this age, such as retirement planning and enjoying your retirement once you finally hit that age.
If you have been diligent and proactive and have established a plan before hitting advanced ages, then all you need to worry about is the continued maintenance of your plan in accordance with any relevant changes in your life.
If you are having trouble beginning or maintaining your estate plan, contact the financial planners at PAX . As CERTIFIED FINANCIAL PLANNER™ Professionals, we can help you with any estate planning questions.
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