Estate planning often gets put off until later in life and many don’t start thinking about it until they are close to retirement age. Unfortunately waiting so long can limit your options and make it harder to manage your estate the way you would prefer. Worse, not having estate planning in place when you’re younger may mean you won’t have any control over what happens to your assets if you pass.
Most financial planners recommend planning your estate as soon as possible. Let’s talk about what that means, how you should maintain your estate plan, and why having a good estate plan is important.
When Should You Start Planning Your Estate?
Ideally, you should start estate planning as soon as you turn 18. At that point, you are legally and financially responsible for your own affairs and are your own power-of-attorney. Should you become incapacitated or lose your life, an estate plan helps outline your wishes and determines how your assets will be distributed. Without a plan, the courts will likely decide what happens to your assets or they will revert to your next of kin.
Don’t worry too much if you don’t start estate planning that early, it’s pretty common not to think about estate planning as a young adult.
Once you hit certain life stages, though, estate planning becomes more important. Here are some common occurrences on when you should start estate planning or have at least a couple of documents determining how your assets should be dealt with.
You have a savings account: Money in your savings account is an asset. Even if your balance isn’t very large, you may still want to name a friend, family, or non-profit as the beneficiary of your account.
Home Ownership: Once you own a home, you have a significant property under your control. In the event of your death or incapacity, proper estate planning will allow you to name a beneficiary who will inherit your home (and any outstanding debts on your home).
Significant Property Ownership: Even if you don’t own a home, other significant properties like your car, a boat, land, or significant stocks and bonds, might still need some estate planning.
Marriage: Marriage, divorce, and remarriage are all good times to revisit your estate planning and make sure you have the right beneficiaries listed for your personal assets and your assets as a couple.
You’ve become a parent: Once you’ve had a child it’s especially important to have some estate planning to name a guardian and name any inheritance you might have for your child. You should also make sure your child is listed as a potential beneficiary on any life insurance policies.
Travel: Estate planning is also important before big trips and travel opportunities. Travel always comes with some risk, so have a plan for your assets before you leave to protect you, your assets, and your beneficiaries.
How Often Should You Update Your Estate Plan?
Having an estate plan isn’t enough, you also need to keep your estate plan as up to date as possible. In addition to the major life changes and events we’ve already mentioned, it’s a good idea to revisit your estate plan every 3 to 5 years.
If you aren’t sure what to include in your estate plan or need help making sure you have enough detail, our qualified team of financial planners will be happy to help.