Retirement is not too late to begin estate planning. Ideally, estate planning begins when you reach adulthood. However, frequently, parents will request basic estate documents for a child heading to college, like an advanced healthcare directive or a financial power of attorney. If a child was hospitalized and parents need access to medical information, they will need an advance healthcare directive. If parents are handling financial matters for a child, they will need a financial power of attorney, especially if the child plans to spend a semester abroad.
More commonly, estate planning begins when an individual or a married couple realizes they need a plan for their minor children. All parents must consider what would happen if they are no longer able to care for them due to incapacity or death? Purchasing real property is another precursor to initiating the estate planning process. After having made a 20% down payment, there will be equity in the property. A prudent person will plan to protect their investment from court costs, attorney’s fees, and professional fees, in case something happens to them. This can be accomplished with a well thought out estate plan, and possibly a living trust.
Unfortunately, many individuals wait until they are retired before they start to plan. As we approach retirement age, we begin to realize we are not going to be around forever. What does their estate look like? Who is going to step in to manage your financial affairs and protect your loved ones? Who has authority to make healthcare decisions? How will your assets be distributed? Who will care for your pets?
Do you have a special needs child or grandchild who needs to be protected? Is there an adult child at home who never launched from the nest and is dependent on you for support? Is there a plan to keep the adult child from ending up on the street? It’s never too late to begin estate planning, unless the individual has passed away. Then, we have to sometimes scramble, get all the documents together, and close out the estate.
Do Most People Wait Until Later in Life or Do Most People Start Estate Planning Earlier?
For young professionals, estate planning can be almost a rite of passage. It’s a part of growing up. You feel you’re an adult now, so you’re going to sit down with an attorney and put together a will and living trust to and make sure your family is protected. We can all be called home at any time, regardless of age, but as we grow older and wiser, we begin to think more seriously about estate planning. As our relationships change and trusted individuals are no longer living, the estate plan must be updated.
How Do You Advise Clients That Set Up Their Estate Plan Early But Do Not Review It?
Estate planning is not a onetime event. Estate planning is a lifelong process. We begin when our kids are small, but then they grow up, and are eventually out of the house. In the early stages of estate planning, we might name our own parents to be guardians, successor trustees, or executors. Then, as our children are approaching their early twenties or thirties, we are able to evaluate their financial and emotional maturity, we give them more responsibility. As life changes and grandkids enter the picture, it may be time to update your estate plan. The one thing that’s constant in this world is change. We are all changing, so our estate plan needs to reflect those changes over time.
Initially, we are concerned about minor children. Then, we are concerned about adult children and management of the assets. Later in life, we may be concerned about charitable planning or protecting assets from the cost of nursing home care. For those who have put quite the nest egg in a retirement account, how do we protect that retirement account? How do we make sure it is not being wasted away on the debts of our child?
For more information on Initiating Estate Planning Before Retirement, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (615) 628-7775 today.