Starting your estate planning is important and should ideally begin as soon as you have significant assets, dependents, or a clear vision of how you want your affairs handled after your death or in case of incapacitation. Here are some key points on when you should consider starting your estate planning:
1. When You Become a Legal Adult (18+):
- Basic Planning: At a minimum, all adults should have a basic estate plan, including a healthcare directive and a durable power of attorney, to ensure that their medical and financial decisions are handled according to their wishes if they become incapacitated.
2. When You Acquire Assets:
- First Job or Major Purchases: Once you start earning money and acquiring assets (e.g., savings, a home, car, or valuable personal property), it’s important to have a will to specify how those assets should be distributed upon your death.
- Beneficiary Designations: Even if you don’t have many assets, you should ensure that beneficiary designations on accounts like life insurance or retirement accounts are up to date.
3. When You Get Married:
- Spousal Considerations: Marriage changes your legal and financial responsibilities, making it essential to update your estate plan to reflect your spouse’s role in your financial and healthcare decisions, as well as in the distribution of your assets.
4. When You Have Children:
- Guardianship: If you have children, especially minors, it’s crucial to have a will that designates a guardian for them in case both parents pass away.
- Trusts for Minor Children: You may also want to set up a trust to manage your children’s inheritance until they reach an age where they can responsibly handle it.
5. When You Experience Major Life Events:
- Divorce or Remarriage: Life events like divorce or remarriage require updating your estate plan to reflect changes in your beneficiaries and decision-makers.
- Changes in Financial Situation: If you receive an inheritance, sell a business, or experience any significant change in wealth, it’s wise to update your estate plan accordingly.
6. When You Approach Retirement:
- Retirement Planning: As you near retirement, estate planning should be revisited to ensure that your plans align with your current financial situation and long-term care needs.
- Medicaid and Long-Term Care: Consider planning for potential long-term care needs, including the possibility of Medicaid eligibility, which may involve protecting assets through trusts.
7. When You Are Diagnosed with a Serious Illness:
- Healthcare Directives: If you face a serious health condition, it becomes critical to have updated healthcare directives, a living will, and powers of attorney in place to ensure your healthcare and financial wishes are respected.
8. If You Own a Business:
- Succession Planning: If you own a business, estate planning is vital to ensure a smooth transition of ownership and management in the event of your death or incapacity.
9. Periodically, Even If Nothing Major Has Changed:
- Regular Reviews: It’s a good practice to review and potentially update your estate plan every 3 to 5 years or whenever there are changes in laws, your assets, or your family situation.
10. At Any Age to Ensure Peace of Mind:
- Proactive Planning: Even if you are young and healthy, starting estate planning early can provide peace of mind knowing that your wishes will be respected and that your loved ones will be taken care of according to your intentions.
Summary:
You should start planning your estate as soon as you have assets, dependents, or legal responsibilities that require clear instructions for handling upon your death or incapacitation. Life events like marriage, the birth of a child, significant changes in wealth, or a health diagnosis are particularly important triggers for beginning or updating your estate plan. Regular reviews and updates ensure that your plan remains aligned with your current wishes and circumstances.