Death tends to be far from most people’s minds the majority of the time, which makes sense given that it’s a morbid topic of discussion. However, when it comes to your property and what happens to it when you inevitably do pass on, the topic requires some careful consideration. You may be surprised to find out when the best time to begin estate planning really is.
What is Estate Planning?
The word ‘estate’ conjures up images of mansions, gated communities, and muscle cars. But an estate actually refers to all of the property owned by a particular person. That means your small house, your car, your computer, your stuffed animal collection, your plants, and even your pets all fall under your ‘estate.’ When you die, you obviously can no longer manage that property so it becomes a legal matter as to what should be done with it. That’s where estate planning comes in.
Estate planning is simply what it sounds like: making a plan about what to do with your estate once you die. This is how you ensure that your property goes to the people or organizations that you want it to, rather than being divvied up by a local probate court after you’ve moved on. Estate planning also dictates your end-of-life medical care and who is in charge of those health decisions if you’re unable to make them yourself, who becomes the guardian of your children after your death, and what your burial plans are.
When Should You Begin Estate Planning?
Contrary to popular belief, you do not have to wait until you’re old or sick to begin estate planning. In fact, many financial advisors would recommend that you start the process as soon as you turn 18, as that is when you become a legal adult with your own power of attorney. Tragedy can strike at any time, and while discussing what should happen after such an unexpected calamity occurs can seem dismal, it is much less difficult than what your loved ones will face should you pass on without an estate plan in place.
That being said, the majority of people do not actually begin estate planning when they turn 18 even if that’s what’s recommended. However, there are some life events that can trigger a need to begin estate planning, or if you’ve already begun estate planning, these occurrences may suggest a need for updating your plan.
New Accounts – Whether you’re opening a Savings Account, starting a 401(k), or obtaining a life insurance policy, opening new accounts can be a signal to decide where those assets will go once you pass.
Buying Property – If you purchase a home or other property, you should probably start estate planning to help your loved ones avoid lengthy probate in your absence.
Marriage – When you get married, you combine your assets. This is a great time to go over what those assets are and decide what happens to them when one or both of you die.
Having Children – Whether you’ve recently given birth or adopted a child, you should either begin estate planning or update your current plan to assign a guardian and allocate assets for your new child should you pass on. You can also consider updating your plans as additional grandchildren are born.
Divorce – Divorce is extremely common these days, so if you happen to be in that situation, do not forget to update the estate plan you made with your ex-spouse.
Inheritance – If you’ve received additional money or assets recently, you’ll want to include those in your estate plan.
Health Issues – Health issues can be an important indicator that you should start considering what will happen to your estate. Even if you are not terminally ill, a serious condition can illuminate the necessity of managing your assets so that you are prepared should anything worse come along down the road.