Much like the dynamics of our lives evolve over time, so too should the contents and structure of our estate plans. It is a mistake to believe you only need an estate plan upon reaching a certain age or milestone like retirement. To the contrary, estate planning is necessary from college to the nursing home, and at many points in between. The following examines various life stages and estate planning suggestions for each:
The Young and the Invest-less: You are never too young to consider an estate plan. For instance, who will handle your student loan debt if you pass away? What about your car, musical instruments or beloved pet? As well, how would you like to be treated if you are in a coma or persistent vegetative state? Addressing these issues in a simple estate plan can help your family avoid the headache of determining your wishes when you are no longer available to speak for yourself.
Single and Happening: If you are single and making good money at your job, chances are you have begun saving for the future with an IRA or 401(k). You may also have purchased a home or made other investments – all of which should be addressed by an estate plan. If you are not yet married and pass away suddenly without a will, your property will pass to your parents, siblings or other relatives according to the laws of intestacy. If you are in a long-term relationship with a partner, but not married, current laws do not protect that person’s interests in your estate. This arrangement could lead to severe animosity between your partner and family in the event disagreements arise in the handling of your funeral, disposition of assets and specific bequests of personal property.
Married With Children: Once you get married, an estate plan becomes an essential component of your financial portfolio – even more so once you have children. Not only does your plan address the unthinkable event of arranging for the care of your children if both you and your spouse die simultaneously, but your plan should include Powers of Attorney, Healthcare Directives and trusts, if applicable to your financial situation.
Divorcing: It is critical to update your estate plan post-divorce, or your family could face the unintended awkward situation of your ex-spouse serving as executor, beneficiary and fiduciary of your estate. Also, if you are headed toward divorce, there are certain laws pertaining to your financial composite that require you to maintain status quo until the division of property becomes final. However, these restrictions do not apply to powers of attorney and you should change your agents as soon as practicable during the pending divorce proceedings.
Planning to Remarry: Remarriage presents a host of estate planning issues to address, particularly if one or both spouses enter the marriage with children from a prior relationship. Your new estate plan should make specific provisions for your children, if that is your wish, to ensure each receives a fair portion of your estate in order to eliminate conflict with your surviving spouse. This is also the time to change beneficiary designations and powers of attorney. As well, recently-enacted portability laws may affect the federal tax exemption threshold of both you and your new spouse depending upon whether each of you is widowed at the time of remarriage – requiring a review by an estate planning attorney who can advise you of the best way to organize your assets to minimize tax liability and maximize exemptions.
Widowed: If you are recently widowed, it is time (again) to change beneficiary designations, update your will and redo your powers of attorney. Placing your assets and property in trust is also especially important at this stage to ensure minimal tax liability and ensure your children or heirs are properly identified by the contents of your estate plan. Planning for long-term care also emerges as an issue for widowed individuals concerned about who will tend to their medical needs as they get older.
Regardless of your stage of life, we encourage you to meet with an experienced estate planning attorney to discuss your needs or address any necessary changes to your current estate plan.