Have you taken the time to consider what will happen to your assets and belongings after you pass away? This question is critical to ask at various points in life, despite not being very fun to think about. Only with the right Estate Plan can you make sure your end of life wishes are followed and your loved ones are taken care of after your death.
So when is the right time to start thinking about Estate Planning?
When Does an Estate Plan Become Necessary?
Many financial advisors would recommend starting an Estate Plan the moment you become a legal adult, and updating it every three to five years after that. The reason for this is because at 18, you are newly responsible for your finances, healthcare (in some states), and power of attorney; and you want to consistently make sure everything is accounted for. However, for most young adults an estate plan is the furthest thing from mind — which is normal.
But there are a few common life events that warrant prioritizing your Estate Plan that one should never ignore. No matter what your age, consider the following life occurrences as signs to start (or update) your Estate Plan:
-Savings Account - As soon as you start a savings account, a natural next step is to designate where those funds would go in the event of your death. This will ensure the account can be passed on to a loved one or cause of your choosing.
-Home & Additional Property Ownership -The purchase of a home or other property is a sign to start estate planning, as you most likely want to avoid lengthy probate court proceedings.
-Marriage & Remarriage - Combining assets, no matter how many, is a crucial time to start estate planning. Take time to determine what happens in the event of one spouse's death, as well as both.
-Travel - At the very least, it is recommended to update your estate plan before big trips. Particularly if you travel for long periods of time or frequently leave the country.
-First child, and each one after - One of the most obvious estate planning triggers is the birth of a child. You need to think about guardianship and financial security in case anything were to happen.
-Inheritance of money or other assets - An inheritance can kick in suddenly, and provide people with more assets to take care of in the midst of a difficult time. Update your estate plan to reflect any additional money or assets you inherit when you can.
-Divorce -If you find yourself divorced, it is critical to update any previous estate plans that were made with your former spouse.
-Grandchildren or births in the family - With new family members to consider, it is a good plan to update your Will or any Trusts to ensure they are taken care of as well.
When to Nominate a Guardian
As you prepare to have your first child, it is always smart to begin thinking about who you would appoint as a guardian for him or her in the event anything were to happen. This is not a thought most new parents want to dwell on, but it is still crucial to get it into writing. Typically, a guardian is named when you create a Will, but there are other options available for those who may not be ready for this process. Here at Trust & Will, we provide you with state-specific Nomination of Guardian documents to ensure your child is taken care of by a trusted loved one. It is important to remember that these documents will need to be updated each time you have a new child.
When to Make a Will
The best time to make a Will is essentially as soon as you become a legal adult or reach any of the above estate planning triggers. Unfortunately, many Americans pass away without a valid Will. This leaves family members in the midst of loss while also being in charge of a number of decisions they may not have considered. A Will can prevent this situation, by allowing you to appoint a healthcare proxy, designate a power of attorney, and specify how your assets and money will be distributed.
Trust & Will aims to make this process as seamless as possible and can help you customize a Will today. If you happen to already have a Will or own more than $160,000 in assets — it might be time to consider going one step further and create a Trust.
When to Create a Trust
If you have more assets, including property or other investments, it may be time to start your Trust. Trusts give you more control over where your assets will be distributed while you’re still living and after death, and can help you avoid probate. Additionally, creating a trust can help you avoid additional taxes or fees as your assets pass to various beneficiaries. Trust & Will can walk you through the various types of trusts available to ensure you have a comprehensive Estate Plan in place.
When to Update Your Estate Plan
Estate planning “triggers” are essentially any milestones that increase your wealth or impact how you want your assets distributed after death. Each time you approach one of these life events, make sure these additions are accounted for by updating your Estate Plan. After all, life can change quickly and it is important to reflect that with proper planning. A good rule of thumb is to revisit and update your estate plan every three to five years.
This article was originally published by Trust & Will. Follow this link the learn more about Trust & Will and start your estate plan.