The concise answer to this question is easy: NOW. If you are old enough to think about what to do with your worldly possessions, you are old enough to plan what to do with them. The common misconception is that estate planning is for old folks with lots of money and expensive things, but it is much more complicated than that. Think of estate planning not as one thing to do before you die but rather as an ongoing process of re-evaluation and adaptation. As you grow and change in your life, so will your fortunes and relationships, so the best time to begin your estate planning is in your 20s.
Why is it important to start planning your estate so early?
Firstly, estate planning isn’t about who gets your stuff when you die. It is mostly about ensuring that if something happens to you, your loved ones are not burdened by whatever consequences may follow. For example, if you are in an accident which leaves you comatose, there should be clear instructions about what your doctors and family should do. If you leave it up to your family, they could end up in court, paying large amounts of money to an estate attorney for a judge to decide what is best. Who says the judge will get it right?
You also don’t want your family to have to wade through a costly legal process for the sake of access to your last payslip, which might only be $500. It will cost them more to go through the motions, which is no way for anyone to get closure.
You may be reading this thinking, “Well then, according to this, I’m too old to start planning my estate. I’m in my thirties/forties! What’s the point?”
There is always a perfect time to start planning your estate, and that is right now. Even if you are in your forties or fifties, it’s never too late to take control and decide what kind of legacy you would like to leave behind. Any Reno estate lawyer will tell you the same thing. Now is better than ever. And there is a roadmap for you to follow.
What To Do and When
Here is a helpful breakdown of what you should be doing at each age range.
18-29 Years Old
At the age of majority, which is 18, you have the authority as an adult to sign contracts and essentially make your own decisions. This freedom means you are in charge of your own life and you need to step up and become accountable.
Firstly, you need to find an estate lawyer or business planning attorney to consult about your legal documents. Find one you feel you can relate to, trust and rely on to see your decisions carried out. Although it is easy to change lawyers, the process is not always straightforward, so you want to find the right one for you and build a relationship.
They should be local to you. Say, for example, you live in Reno, Nevada. You don’t want to find a great estate attorney online and start a process, only to discover that they have an office a hundred miles away. Local is better, so when searching, it is best to use the search term “estate planning attorney lawyer near me.”
Next, you should work with your Reno estate lawyer to create the following foundation documents:
- Power of attorney. This document names the people who will have the authority to make decisions on your behalf if you cannot. Preferably, you should name two people. One will have the financial power of attorney, and make decisions about your financial, physical and intellectual assets. The other person will make decisions about your health. It is important that you trust these people to carry out your wishes, so they should know you and respect your views.
- Healthcare directive. This document follows on from your power of attorney and deals with how to deal with healthcare decisions if you cannot make the choices yourself. Returning to the initial example, your healthcare directive will state whether you prefer your medical practitioner to use extreme lifesaving interventions to keep you alive. In this document category, there are many different and complex options, and an estate lawyer is best positioned to guide you through the process.
Once these documents are set down, you have achieved your first estate planning milestone. You should be confident that whatever your financial or medical position, you have people to carry out your wishes.
If you plan to travel, you must ensure that your documents are in place and up-to-date in case of an emergency.
30-39 Years Old
Historically, this stage of your life should be when you buy a house, get married, have a family and settle into a well-paying job that allows you to collect some assets. In the last twenty years, however, people in their 30s have not been buying houses or having children, and many do not even have jobs. As a 35-year-old, you may be living with your parents, co-habiting the same house as roommates.
Regardless of where you live or your income, at this stage, you should contact your estate lawyer in Reno again and speak to them about two more legal documents. These follow from your powers of attorney and health directive:
- Will. This is probably the foremost part of estate planning in the layperson’s understanding of the process. A will lays out what should be done with your assets (whatever they may be), and your body, when you die. It nominates an executor who will carry out your wishes. It should also state who should be responsible for your children if you have any. You should include further details such as usernames and passwords for your executor to wrap up your online activities. These could consist of banking, educational or social presences you may have in the virtual world.
- Trust. You will need to speak to your estate lawyer about this, because trusts come in different forms. Depending on your intention, your estate or business planning attorney will advise you on a specific type of trust. Generally speaking, though, a trust is a way for you to transfer ownership of property or assets to another person. You can also nominate someone to manage the trust on behalf of the people you include in the trust, called the beneficiaries.
This next milestone will help you sleep better at night, knowing that there are people to carry out your wishes if and when your life ends.
40-49 Years Old
When you reach this age, you typically are expected to have amassed some wealth and have set yourself up for retirement at 60 or 65. Again, even though the current economic climate does not nurture these types of achievements, you should at least have the first three or four documents in place. You don’t have to have any income to decide how you want your body to be disposed of or to make sure that someone informs your online communities of your passing, and closes off your social media accounts.
If you have not yet put these contingencies in place, do it now.
You should also use this stage of your life to discuss your parents’ estate planning with them. Whether they have policies and orders in place or not, it is the right time to have a frank and thorough discussion about their wishes. You might need to help them with their estate planning process, or you might be relieved to find that they are prepared. One way or another, you need to know. Your discussions should cover topics like long-term care and how they (or you) will fund it, medical decisions, what they are or who makes them, and how they want their assets distributed.
If you have teenage children, you should also use this time to begin educating them on the basics of estate planning and why it is necessary to start early. Teenagers are difficult to reach with these types of discussions, so you should ask your estate planning attorney to speak to them instead.
If you have divorced and possibly remarried, you should ensure that the correct beneficiaries are named for all your documents.
You may gather small policies as you move through life, from job to job, and you should keep a record of them and who the beneficiaries are. These policies, when taken together, are known as a portfolio. They can include small insurance policies for death and disability, retirement annuities, or other methods that help you to save or invest money towards your dotage. You may be absent-minded about these things and forget what they are or where you put the documents. Now is the time to evaluate all the policies in your portfolio, know what each one is worth, and who will benefit from them under which circumstances. Then give all of it to your estate attorney, who will keep it safe until it becomes relevant.
After 50 Years Old
You should have a plan of action or at least a good idea of what should be done in the event of your death or incapacitation. If you have not yet documented this with a lawyer, now is the time.
If you have already made your plans, you should continue through an iterative process, each year or two, of re-evaluating and updating your plan. You can never have complete control of events after your passing, but you can ensure that it is not complicated by lack of planning.