When Should You Start an Estate Plan?
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Common Reason To Begin Estate Planning.
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. Moreover, only with the right Estate Plan can you ensure your end-of-life wishes are followed and your loved ones are taken care of after your death.
Nevertheless, when is the right time to start thinking about Estate Planning? By paying attention to certain life milestones, you can identify the right time to take care of each of your estate planning needs. Having a valid will or estate plan in place has many benefits, but perhaps the most important is that it offers peace of mind for you about your family’s financial future if you can no longer provide for them. Depending on your specific situation and needs, we can use a Will, Trust, and other tools to ensure you control what happens to your assets – and you can care for your loved ones – after you pass away.
When Does an Estate Plan Become Necessary?
It is always a good time to begin estate planning. Whether you are the breadwinner in a high-asset family with children and grandchildren or a recent college graduate with your first job, there are good reasons to consider what will happen to your family’s financial health if you pass away. Consequently, many financial advisors would recommend starting an Estate Plan the moment you become a legal adult and updating it every three to five years. At 18, you are newly responsible for your finances, healthcare (in some states), and power of attorney; and you want to make sure everything is accounted for consistently. Nonetheless, for most young adults, an estate plan is the furthest thing from the mind – which is normal.
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Common Reasons to Begin Thinking About Estate Planning
But a few everyday life events warrant prioritizing your Estate Plan that one should never ignore. No matter what your age, consider the following life occurrences as signs of starting (or updating) 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: Purchasing a home or another property is a sign to start estate planning. 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 and both.
Travel: At the very least, updating your estate plan before big trips are recommended. Particularly if you travel for long periods or frequently leave the country.
First child and each one after that: One of the most apparent estate planning triggers is the birth of a child. It would be best to think about guardianship and financial security if 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 during 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 with your former spouse.
Grandchildren or births in the family: With new family members to consider, it is an excellent plan to update your Will or any Trusts to ensure they are taken care of when the sad day occurs.
When to Nominate a Guardian
As you prepare to have your first child, it is always wise to begin thinking about whom you would appoint as a guardian for them if 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. Nevertheless, a guardian is named when you create a Will, but other options are available for those who may not be ready for this process. Ordinarily, as a Trust and 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 as soon as you become a legal adult or reach any of the above estate planning triggers. Conversely, many Americans pass away without a valid Will. This leaves family members amid loss while also being in charge of several 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 have a Will already or own more than $160,000 in assets, consider going one step further and creating 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. 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 different types of trusts available to ensure you have a comprehensive estate plan.
When to Update Your Estate Plan
Accordingly, estate planning “triggers” are 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 essential to reflect that with proper planning. A good rule of thumb is to revisit and update your estate plan every three to five years.
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Notwithstanding, Estate planning is one of the most important things you can do to protect yourself, your family, and your future. Creating a Will or even designation of a Guardian for your children can go a long way in ensuring your wishes are followed after death. When you approach one of the milestones mentioned above, it is good to consider your options.