For some people, any mention of the term “estate planning” is likely to conjure up images of an extremely wealthy individual preparing a complicated series of wills and trusts in order to pass down their assets, money and real estate holdings to various family members, friends and charities.
In truth, estate planning is a concept that’s much broader than that (estate planning can also be accomplished with beneficiary designations on your financial accounts and by holding real estate with right of survivorship, for example), and is an important consideration for individuals of many different income and wealth brackets. While everyone’s estate planning needs are different, it’s likely that you may need to begin your estate planning efforts sooner than you might think.
Estate Planning is for Everyone. First things first – estate planning is the act of making sure that your assets will disposed of in whatever manner you desire after you pass away. This is true regardless of the size of your estate. Even if you don’t believe that you’re particularly wealthy, chances are good that you want certain things to happen with those resources after you’re gone. Estate planning is the means by which you achieve those types of goals.
When to Start Your Estate Planning. While you can always begin considering your estate planning goals whenever you choose, there are a few situations and circumstances that practically demand that you do so. Here are some of the most common:
Whenever you get married. Getting married is one of the most common triggers for first beginning to consider estate planning goals.
When you have children. Having children is another significant life change that spurs many individuals to begin estate planning.
Whenever you inherit a large sum of money. Surprisingly, one of the most common situations that prompt many individuals to begin estate planning is when they receive a large sum of money as a result of someone else’s estate planning.
Be Prepared to Update Your Plan. Keep in mind that the estate plan you prepare when you’re 30 years old and just married is quite likely to be different from an estate plan that’s appropriate for when you’re 65 or 70 years old and have multiple children. This means that even after you have an estate plan in place, you’ll wish to revisit it periodically, including whenever you experience a significant personal change in life. For example, any of the occurrences listed above will likely trigger a reexamination of your plan, but so too will getting a divorce, or the death of someone in your family.
You might also wish to update your estate plan as your wealth grows over time. Individuals with more wealth sometimes decide that in addition to providing for their loved ones, they wish to include additional beneficiaries in their estate plans – organizations such as charities, colleges or universities, or other causes that they feel strongly about.
The important thing is to not put off the estate planning process. Even if you feel like you don’t have much to pass along, it’s vital that you start to consider the implications of estate planning early in life.