I recently came across an article by one of the major web based legal services companies opining, (excuse me, wrong word: See November 27, 2019 Blog: “The Pitfalls of DItY Legal Information Websites”) “commenting” on how you should consider your estate planning needs based upon your age. And I thought, “wow, that is really bad advice.”
The more productive way to look at estate planning is not age, but life milestones. As we don’t find ourselves hitting life’s milestones at the same age, it really doesn’t make sense to use age as a method. Here is a better way to think about it.
Milestone: Leaving the Household
Having children start estate planning when they leave the house isn’t only a good time, it could be the best time. Why? Because they are already psychologically in an “independence” mindset. You might not get much traction with a discussion about being fiscally responsible, or saving for retirement, but a discussion that presuppose they will be successful and accumulate wealth might be a good way to get them thinking about these things on their own.
From a practical standpoint, most children don’t leave the house before the age of majority. So, the need for them to have their own estate plan is minimal. It’s also likely they don’t have much in the way of assets. If they do, they are probably either titled jointly in a parent’s name, or entirely in a parent’s name. Once they strike out on their own you are likely to start building assets and acquiring titled property. If they start titling property in the name of a Trust as they acquire it, it will become second nature to them as their wealth grows.
Will/Trust: If you don’t think you can afford a Trust (you probably can, they have become very affordable), at least see your children leave the house with a Will. These can be drafted to assume a future spouse and children (nod, nod, wink, wink from the future Grandma).
Advance Healthcare Directive (AHCD): Once emancipated, people should have a person or person designated to speak on their behalf when they are unable. AHCD’s can be drafted very generally, or with great specificity. Also, think of it as a way to get them thinking about the consequences of their actions as they head out into the world and are making their own decisions. (See February 12, 2020 Blog: Preparing your Advance Health Care Directive Agent.)
Power of Attorney (POA): The need to have a parent who can step in with legal power and handle a child’s financial affairs when they are not able cannot be overstated. Having your children leave the house with a POA in place is not just practical, its sound planning
Milestone: Marriage/First Child
If you don’t have an estate plan at this point, consider this your wake-up call. If you need more information on this, please see January 28, 2020 Blog: Estate Planning for Parents with Minor Children.
Will/Trust/AHCD/POA: If you don’t have these yet, its time to get started. If you do, now is a good time to get them updated. Likely you will want to change your primary agent to your spouse. You will also want to designate guardians for your minor children. You may want to update all your agents to now include siblings, or friends who have reached the age of majority.
Milestone: Change of Residence/Job/Family
As you move and develop new relationships, so might your preference for your designated agents change. A sibling who resides in another state that you named as guardian for your infant child made the most sense at the time, but now with that your child(ren) in school, you may prefer some stability as they enter high school. You may have other agents that you now see as better suited for the assigned tasks, like a close friend who lives in the area. Finally, it may be time to create an education Trust, or some other vehicle for you to designate funds for certain purposes.
Will/Trust/AHCD/POA: Major life changes can create the need to adjust your agents. These changes are easy and inexpensive to make.
Milestone: Retirement
If you have read my extensive Frequently Asked Questions found on the website, then you know I like to refer to the estate plan as the last part of your retirement planning. As you are in the mode of addressing your assets, now may be a good time for an estate plan tune up. You may have initially decided to split your estate evenly among your children, but after providing substantial assistance to one child during your lifetime, you may want to change that proportionally. You may also decide, as many clients do, that your children are now well established and the greater need (and tax advantage) is to pass your wealth on to the next generation.
It may also be the time to adjust your agent selections. Up to this point you may have designated siblings, or close friends. You might now want to designate your children to handle your affairs.
Will/Trust/AHCD/POA: Consider the need for a retirement estate plan “tune-up.” Possibly adjust distribution of assets among beneficiaries or include a charitable organization. Look at who would be the right agents for your Trust, as well as medical and financial needs.
Takeaway
Consider using your life’s milestones as appropriate times to adjust your estate plan. Need more information about what estate plan would be right for you? Whether Legacy or Business Planning, Contact CASHMAN LAW today for a free consultation to get the Plan You Deserve.™
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