When Should You First Create an Estate Plan?
Surveys that are conducted find that most Americans are unprepared from an estate planning perspective. In fact, Caring.com has been providing relevant figures on an annual basis for many years. Year after year, they find that two out of three people do not have estate plans in place.
Curiously, when they look further, they have found that most people without plans know that it is important, yet they procrastinate for one reason or another. Some of them do not act because they feel they don’t have sufficient resources to pass along.
Others intend to get around to it eventually, but they think they have plenty of time. This is possible, but you never know what the future holds.
Core Responsibility of Adulthood
Everyone should view estate planning as one of the basic responsibilities that goes along with being an adult. A lot of people get an introduction to the subject when they land their first career positions. Most jobs come with company paid life insurance, and there are 401(k) plans.
At that point, you may start to think about life as a senior citizen for the first time. Granted, an estate plan for a single person with limited resources is not going to be very complicated. However, you should take care of the basics.
Life insurance is definitely part of the equation. If it is not offered by your employer, you should have enough coverage to take care of your final expenses if you die before your time.
Advance directives for health care should be included as well. People of all ages become unable to communicate medical decisions after they are injured in accidents. In addition, incapacity can strike people that are challenged by severe illnesses.
A living will is a directive that is used to record life-support preferences. You should add a durable power of attorney for health care to name someone to make medical decisions for you. These would be decisions that are not related to life-support. A HIPAA release should be included to give the agent the right to access your medical records.
Marriage and Parenthood
If you get married, the need for an estate plan increases because someone is depending on you to help them maintain their standard of living. When you have children, estate planning becomes an absolute must.
Sufficient life insurance is essential for relatively young adults with minor children. You should name a potential guardian in a simple will when you are devising your plan. However, when you have a basic will, there is no custodian in place that would manage assets on behalf of a child.
To account for this, you can add a testamentary trust, which is a trust that is contained within a will. In the event of your death, the trust would be created, and the trustee that you designate would manage the assets on behalf of the child or children.
The revocable living trust is another option. You would be the trustee while you are alive. You would name a successor to assume the role upon your death. An adult would be designated to manage the assets after your passing, so this would be a solution if you have dependent children.
At the same time, a living trust can be the right estate plan centerpiece for the rest of your life. You can adjust the terms if and when updates become necessary. Plus, many married couples can benefit from the utilization of a shared living trust.
Ongoing Process
A lot of people that have procrastinated breathe a sigh of relief after they finally put a plan in place. They feel as though the matter has been handled once and for all. In fact, this is a shortsighted viewpoint.
Unless you develop your initial plan when you are on your deathbed, you should view it as an ongoing process. Major life events like changes in marital status, additions and subtractions to the family, and an improved financial situation can trigger the need for estate plan updates.
Take Action Today!
If you are currently going through life without an estate plan, today is the day for action. In addition, if you have a plan that is outdated, we can help you make the necessary revisions.
You can schedule a consultation at our Oklahoma City estate planning office if you call us at 405-843-6100, and you can use our contact form to send us a message.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.
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