When Should I Start My Estate Planning Journey?

October 15, 2021

Big events are the milestones of our lives, and they should also prompt us to begin or revise our estate plan. At other times, we look at our personal timeline and realize that we need to get serious about estate planning.

Here are some ways that our milestone birthdays and important life events can determine the next steps we should take when it comes to making an estate plan.

Your 18th Birthday

This is a fun, dizzying time of new experiences as you finally break into adulthood. Between your birthday party, graduation party, and preparation for college, who is thinking about an estate plan?

You should. Even if you are still living with your parents, you are legally an adult. That means certain things belong to you, even if they only amount to a used car and a few special personal items. Make a list of all the things that belong to you, and think about who would get them if something unfortunate were to happen. You can even begin tracking your net worth to see how your wealth grows throughout your life.

Marriage

Estate planning may not sound romantic, but it actually provides a perfect illustration of your journey together. Combining your finances and property is like combining your personal strengths and weaknesses—for better or for worse.

You can assess your combined net worth now that your bank accounts may be consolidated. If the home you and your spouse are residing in is only in your name, estate planning is important. It will ensure that the enjoyment and ownership of your house at your death matches your wishes if you want your spouse to receive it when you pass away.

You should also review your insurance policies and retirement plans now that you are married, as you likely want your spouse to benefit from those funds. Ensure that everything has been changed from your maiden name to your married name, if applicable.

Children

Marriage begins your transition away from thinking solely about yourself. This process continues when you have children, even if you never get married. The focus shifts to building your wealth with the eventual goal of passing your life savings on to your children.

While children can represent hope for the future, they are also a constant source of worry. Not only do you need to worry about their safety, but you also need to think about who would take care of your children in the unlikely event that you and your spouse both die before they turn 18. Although this person will never love your children as much as you do, it is important that you do not leave the choice of your children’s future protector up to a judge.

Divorce

Estate planning may be the furthest thing from your mind during this process, but when the divorce is final, you will face a new reality in terms of your finances. Your estate plan must be updated to redirect your belongings away from your former spouse and toward your children and other beneficiaries. You will also need to select new decision makers now that you likely do not want your ex-spouse to be your agent for financial or medical decisions.

Now is the time to rethink your guardianship plan as well. Even though you are no longer married, you and your former spouse still may not both live until your youngest child’s 18th birthday. If the guardians you chose are aligned with your former spouse, you will want to come up with Plan B.

Acquiring New Property

Buying or inheriting property comes with a mountain of paperwork and a million things to consider. This is true whether you are purchasing a new home, an investment property, a second home, or a vacation residence.

Ensure that all of your properties are included in your estate plan. This can be challenging if you buy, sell, or flip houses regularly. In that case, schedule annual check-ups with your estate planning attorney to ensure that you have a clear plan for your current roster of properties.

Death of a Loved One

Whether it is a spouse, parent, or even a child, losing a loved one is a scenario that nobody wants to consider. Grief will initially supersede thoughts about the effect on your estate plan.

Once you are thinking more clearly, schedule an appointment with your estate planning attorney to discuss the necessary changes. The death of a loved one may necessitate naming new decision makers or beneficiaries under your estate plan.

Retirement

Like in The Game of Life®, when you retire, you add up all of your money and property to see what you will have to live off and leave to the next generation. With an up-to-date list, this is a perfect time to revise or create an estate plan.

As part of your estate plan, you can talk to your children about contributing to your grandchildren’s college funds. Your estate plan could also include giving to your favorite charities or establishing a scholarship for your alma mater or a specific type of student who is important to you.

In a perfect world, you will enjoy a long, healthy retirement. However, you never know when your body or mind will fail you. You should finalize your wishes while your health is intact.

Accumulation of Valuables

Making an estate plan is not as simple as “give one-third of my stuff to each of my three kids.” Some gifts can be personalized to reflect your loved ones’ personalities and interests without playing favorites.

For example, you can leave your best set of golf clubs to your one child who enjoys golf. You can also leave jewelry like wedding and engagement rings to specific children. Just make sure everyone gets something special so nobody feels left out.

When the Time Is Right

It is not only major life events that prompt a trip to your estate planning attorney. Sometimes, it is merely a certain birthday. So when is the right time to make an estate plan? A recent poll by Caring.com determined when people think they should take action and when they actually do so.

By Age 35

A healthy 37 percent of respondents said you should have an estate plan by the age of 35. Ten percent came up with the correct answer: age 18. Overall, this group had the right idea that making an estate plan should not be put off for a long time.

By Age 65

As time passes, the need for an estate plan grows more urgent. A total of 75 percent of the survey respondents believe an estate plan is necessary by age 65 or earlier. The rest replied “I don’t know,” but even they must realize this important task should not be delayed past age 65.

However, the survey also showed a disconnect between when people think they should secure their estate plan and when they do. Only 44 percent of respondents aged 55 and older have their affairs in order.

The age 18-34 demographic checks in at 27 percent, but that is better than their middle-aged counterparts. They are falling behind with a rate of only 22.5 percent.

So when you ask yourself how soon you should make an appointment with an estate planning attorney, remember the song “How Soon Is Now?” by The Smiths.