If you don’t have an estate plan yet, you’re not alone. It is not uncommon for Americans to die without having an estate plan in place, often leaving behind a mess to be sorted out by family, friends, and the court system. Guesswork about your intentions and a lengthy journey through probate court, with potentially hefty fees, can cause conflict among your loved ones. Estate planning can begin as soon as one reaches adulthood.
Estate Planning Guidelines by Age.
Legal adulthood:
Once you have turned 18 years old, you are considered a legal adult and, as such, parents no longer have the authority to make financial or medical decisions for you. Even if you’re still dependent on your parents, once you’ve turned 18, they generally do not have the legal right to access your information or make decisions for you. As protection for a situation in which you are unable to make decisions for yourself, it is important to have certain legal documents in place.
Estate planning for adult dependents:
- Health Care Power of Attorney: A legal document that designates another person or persons to make medical decisions for you if you are unable to make them for yourself.
- Durable Power of Attorney: A legal document that authorizes a designated party or institution to make financial and business decisions for you in the event that you are unable able to make them for yourself.
- Will: A legal document to express your wishes for the distribution of your property, including digital assets (i.e. music, videos, books, crypto currency, and photos).
Early Adulthood:
Estate planning for your 20’s:
If you’re in your twenties, you have probably acquired some financial assets like a bank account and a retirement account or 401K. You may also own a car and even a house. Although your situation may be in flux at this juncture, it is a key time to take steps to ensure that the necessary components of your estate plan are in place and up to date to protect yourself and your beneficiaries.
- Health Care Power of Attorney: A legal document that designates another person or persons to make medical decisions for you if you are unable to make them for yourself.
- Durable Power of Attorney: A legal document that authorizes a designated party or institution to make financial and business decisions for you in the event that you can no longer make them for yourself, as well as nominate a guardian or conservator of any minor children in the event of your incapacity.
- Will: A legal document to express your wishes for the distribution of your property at your death and appoint a personal representative (i.e. executor) who will manage this process, as well as nominate a guardian or conservator of any minor children in the event of your death.
Middle Adulthood:
Your acquired assets and family situation have probably continued to change through your thirties and beyond. You may have children along with some blended components to your family due to births, deaths, divorce, remarriage, and/or stepchildren. It’s important to take the time to review and revise your estate plan for necessary updates such as the addition of trusts or changes to beneficiary designations. It is also a good time to broach the subject of estate planning with aging parents.
Estate Planning for your 30’s, 40’s and 50’s:
- Health Care Power of Attorney: A legal document that designates another person or persons to make medical decisions for you if you are unable to make them for yourself.
- Durable Power of Attorney: A legal document that authorizes a designated party or institution to make financial and business decisions for you in the event that you can no longer make them for yourself, as well as nominate a guardian or conservator of any minor children in the event of your incapacity.
- Will: A legal document to express your wishes for the distribution of your assets at your death and defines who will manage this process. A Will also allows you to nominate a guardian or conservator of any minor children in the event of your death.
- Trust(s): Trusts are recommended to avoid probate, provide a seamless transition of the management of your affairs in the event of incapacity or death, protect your assets from creditors, and further define a trustee who can manage your assets and ultimately distribute them to your beneficiaries. If your beneficiaries are minors, young adults or adults with disabilities, a trust will further allow your assets to be managed and preserved for their benefit until a certain age or alternatively, retained in trust to ensure they are able to maximize other benefits available to them. For minor children, a trust is a useful tool to avoid conservatorship proceedings, that would otherwise be necessary under a Will alone.
Retirement and Beyond:
As part of your retirement plan, you should review all components of your estate plan on a regular basis and make any changes. If you don’t have an estate plan, now is a great time to establish one. It is particularly important at this juncture to review the titling of your assets and your asset beneficiary designations. You should also communicate critical information about your end of life plans with your loved ones and beneficiaries.
Estate planning communication:
- Disclose the existence and location of your estate plan with your beneficiaries.
- Communicate your wishes regarding end of life decisions and long-term care. If you have long-term care insurance, make sure your loved ones are aware of those details.
- Discuss any previously uncommunicated details of your estate plan that could potentially cause conflict among family members.
- Consult with your advisors on the tax implications of asset transfers to minimize transfer tax presently or in the future.
Strobl is a team of experienced and trusted lawyers that can advise on all matters relating to trusts and estate planning and administration in Michigan. For more information, visit Strobl online at www.stroblandsharp.com or on LinkedIn.