When Is the Right Time for Estate Planning?  It's Younger Than You Think

By Jenny Ling, Esq.

Whether you think you do or not, you have an estate.  Your estate is comprised of everything you own— your car, home, other real estate, checking and savings accounts, investments, retirement, life insurance, furniture, and personal possessions. No matter how large or how small, everyone has an estate and needs to make a plan for it. 

Most people think they don’t need an estate plan until they are older or have a lot money.  But that’s not true.  Adults at every age should make sure they have an estate plan in place.  Your plan will make sure your end-of-life wishes are followed and your loved ones are taken care of after your death.

Here are typical estate planning considerations by age.

In Your 20s

Once you turn 18, your parents no longer have authority to make healthcare or financial decisions for you.  You may not have many assets, but you still need to have legally enforceable instructions in place about who you authorize to handle your medical decisions and finances if you cannot, not just in the event of death, but also in the event of hospitalization.  Here are 3 important documents that every newly minted adult needs after he or she turns 18:

Health Care Power of Attorney.  A Health Care Power of Attorney names a person to make medical decisions if you are unable to make them for yourself.  It allows anyone you designate to work with doctors ensure that you would get the care you would want if you become incapacitated.

HIPAA Waiver.  This HIPAA waiver allows anyone you designate to access your health records, make doctor’s appointments, order and pick-up prescriptions and help keep track of vaccinations.  Without it, your parents may not even be able to find out if you’ve been admitted to a hospital.  It’s important to note that HIPAA applies even if you are still on your parent’s health insurance so this document is essential.

Durable Power of Attorney for Financial Matters.  A Durable Power of Attorney for Financial Matters designates someone to make financial decisions for you, either effective immediately or if you become incapacitated.  Without it, no one else would have access to any bank accounts or college-related expenses that are in your name.  If you were in the hospital or otherwise unavailable, without this Power of Attorney, no one would be able to help you end your lease or make other financial decisions.  This means that if you are in the hospital for an extended period of time unable to act on your own behalf, the financial repercussions of failing to do things such as pay bills in a timely fashion can be long-lasting in the form of bad credit and collections.

Pets. If you have pets, it is essential that you make a plan for them as well.  Without a plan in place for your pets, if no one offers to take then when you die or become incapacitated, your pet could end up taken to an animal shelter.  If you have a Will, you can certainly indicate there who should receive your pet and even leave them some money for that purpose.  But there is no continuing oversight to ensure that your pet is cared for as you intended and that the money is used wisely.  In fact, the named guardian could even drop your pet off at a shelter and use the money as they see fit and would face no penalty. You can avoid this by having a pet trust for your pet to provide for continued care.

In Your 30s

Typically, by your 30s, you may own a home, have started a family and have some financial assets.  To make sure you protect all that you’re worked for, this is a good time to make sure you have a comprehensive estate plan in place that protects not just your assets but also your family.

Make a Plan for Your Assets.  If you don’t make a plan for your assets, through a Will and/or Trust, Washington’s intestate succession laws will determine who is entitled to your property.  That means that if you have no plan, the law, not you, will decide who will receive your assets.  If you have minor children, they will receive all of your estate in one lump sum when they turn 18 years old.  It is usually not a good idea for 18-year-olds to have access to hundreds of thousands, let along millions, of dollars, a heavy burden for most 18-year-olds.

Guardian Nominations.  No one will love and care for your children exactly the way you do, but as a parent, you should be the one determining who cares for your children if something happens to you.  If you die without making a plan for your children, a judge will decide who should be guardian of your children.  Anyone who is willing to be guardian will be considered.  The judge won’t know the reasons you have for wanting one person over another.  They will pick a guardian for your children based on who can make the best case.  But you can make a plan and name guardians for your children sothe judge will have your guidance in who would be the best choice to care for your children.

Incapacity Planning.  A plan for incapacity only goes into effect when you are unable to make your own decisions.  If you recover and regain the ability to make your wishes known, the legal power you have grated others is revoked.  The same thing happens if you die – your death renders those powers null and void.  Incapacity planning allows you to determine who will make medical and financial decisions for you if you are ever unable to make them yourself.

In Your 40s

If you already have an estate plan in place, congratulations!  If not, now is the time to catch up!

Now is also the time to talk to your parents about their estate plan.  While these conversations can be difficult, understanding your parents’ long-term financial and healthcare wishes is best.  Ask your parents if they have an estate plan in place.  If they don’t, or if the plan hasn’t been reviewed in 5 years, Contact Us to help them make sure their plan is up-to-date and reflects their current situation.  Many parents make a plan when their children are young and then don’t update it, even after their children are grown with kids of their own.

Regardless of your parents’ current medical condition, you should discuss their health care wishes with them.  Do they have an Advance Health Care Directive, also known as a Living Will, to give family direction and ease the decisions regarding end-of-life care?  Have they signed a Health Care Power of Attorney to designate someone to make health care decisions for them?

In Your 50s and 60s

If you haven’t done any estate planning by your 50s, you’re not alone.  Only about 30% of Americans have any estate plan in place.  It is essential that you get a plan in place now to ensure your family is taken care of, and that there is no question about what your wishes are.  If you already have an estate plan in place, now is a great time to review it.  An out-of-date plan is almost as bad as having no plan at all.

In Your 70s and Beyond

At this point, with your estate plan complete, you should focus on reviewing or updating your plan as needed.  Make sure that your estate plan is as clear as possible.

Make a Plan

No matter what age you are, Make a Plan for the people you love because at some point you will become sick or die.  Comprehensive planning will enable you to have peace of mind knowing that your family is taken care of, and that there is no question about what your wishes are.  Contact Us to get these important tasks completed.

Jenny Ling is a partner at the Law Offices of Jenny Ling, PLLC.  She focuses her practices on estate planning, business succession planning, business and bankruptcy.