Estate planning may sound like something that’s just for “old folks.” It’s not. At almost any age, adults can benefit from estate planning. The need for estate planning becomes even more crucial once you’ve had children.
Read on to learn what estate planning is, when you should start estate planning, and the advantages of getting a head start on estate planning.
What Is Estate Planning?
Estate planning involves mapping out how you want to divide your assets after you die, according to TexasLawHelp.org. Part of this process involves deciding ahead of time who should make financial and medical decisions for you if you become unable to make them on your own.
TexasLawHelp.org explains that the documents in an estate plan may include:
- A will: A will is a document that spells out how you want your assets to be distributed following your death and who will be given the responsibility of caring for any of your children who are still minors at the time of your death.
- A trust: A trust is a legal mechanism that lets a third party, or trustee, direct where your money and property go following your death. It offers more leeway than a will in terms of managing someone’s assets. A trust takes one of three forms: living trust, revocable trust, or irrevocable trust.
- A power of attorney: A power of attorney document gives someone the authority to make decisions about your finances, property, and medical care on your behalf.
- An advance directive: An advance directive lays out how you want end-of-life care to be carried out if you become unable to express your wishes and establishes who is in charge of ensuring that your wishes are fulfilled.
When Should You Start Estate Planning?
Estate planning is something adults may wish to consider as early as their 20s. At that stage in life, an adult who is living on their own may wish to consider an advance directive and a power of attorney at the very least.
By the time you’re in your 30s, you may want to consider adding a will or trust to your estate-planning toolkit because you’ll be more likely to have children, a home, and financial assets. With a will in place, you can help ensure that your children will be cared for the way you wish. A trust, meanwhile, can help guide the distribution of your assets.
Once you hit your 40s, your estate plan may already be in place. If so, then you may benefit from periodically reviewing your estate plan to see whether it still meets your needs. If no estate plan is in place, then it’s not too late to get started.
As you turn 50, 60, and beyond, you may still want to go over your estate plan from time to time to make sure it’s up to date. If, like many Americans, you haven’t done any estate planning at this point, now is a great time to get started. Getting your estate plan squared away should be part of your preretirement checklist.
No matter your age, creating an estate plan and keeping it current can benefit your tax planning, be a key factor in leaving the kind of financial legacy you want, and give you peace of mind during retirement.
What Is the Benefit of Getting a Jump on Estate Planning?
Life is fragile and, sadly, can end at any moment. In many cases, death comes suddenly, giving you little to no time to plan for what will happen to your assets after you’re gone. Therefore, it may be wise to engage in estate planning sooner rather than later.
It’s estimated that 50 to 60 percent of American adults don’t have a will. If you’re one of those millions of people, sudden death could mean that the future of your assets would suddenly be up in the air. Wouldn’t you rather have a say in what happens to your financial legacy while you’re still alive?
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