Your estate plan must evolve as you age

Regardless of the stage of life you are currently in, it is important to bear in mind that your estate plan is not a static document. Reviewing and revising your estate plan is critical — because what is important to you in your 20s or 30s likely will be different in your 60s or 70s. The following are some general estate planning guidelines to follow as you progress through life.

Your Late Teens

Once a person reaches the age of majority, parents generally lose the ability to direct an adult child’s health care or financial decisions. This can result in parents not being able to help with financial transactions or speaking with a health care provider. However, executing a durable power of attorney for finances or health care can enable your transition to adulthood to be smoother by allowing your parents or another agent step in if you temporarily become unable to manage your finances and make health care decisions for yourself. For example, if you are heading off to college, your parents could be granted the authority to act on your behalf for financial decisions if needed but you control the parameters of that engagement, such as allowing action only if you were incapacitated.

Your 20s and 30s

If you have recently embarked on a career, gotten married, or both, now is the time to build the foundation for your estate plan. And, if you have recently started a family, estate planning is even more critical.

Your Will is now at the forefront. Essentially, this document divides up your accumulated assets upon death by deciding who gets what, where, when and how. With a basic Will, you may, for instance, leave all your possessions to your spouse. If you have children, you might bequeath some assets to them through a trust managed by a designated party.

A Will also designates the guardian of your children if you and your spouse should die prematurely. A successor guardian should also be designated in case your first choice is unable to meet the responsibilities. If you do not have a Will, state law governs the disposition of assets and a court will appoint a guardian for your minor children.

During your early years, your Will should also be supplemented by durable powers of attorney to authorize someone to manage your financial affairs and make health care decisions if you are incapacitated. The power of attorney documents also authorizes a guardian to care for your children if you become incapacitated. You may also wish to set other documents in place, such as trusts to manage property or reduce estate tax liability.

Your 40s and 50s

If you are a middle-aged parent, your main financial goals might be to acquire a home, or perhaps a larger home, and to set aside enough money to cover retirement goals and put your children through college. It may be appropriate to modify your existing plans to meet your changing needs.

For instance, if you have a Will in place, you should periodically review and revise it to reflect your current circumstances. Now that your children are older, you may not have to worry about a guardian, but you might shift the division of assets to accommodate a child’s college expenses, grandchildren, or the differences in needs of your children, and a trust may be a convenient way to address these issues, especially if you are concerned about a child squandering their inheritance.

If you have not already created a power of attorney, the need is often more pronounced during the middle years. Furthermore, health care directives can complement a power of attorney.

As you approach the later years, your children may have graduated from college and moved out of the house. This usually changes the dynamic for “empty nesters.” Significantly, you may start shifting your emphasis from college savings to asset preservation, with appropriate revisions to estate planning documents.

Your Golden Years

Once you have reached retirement, you can usually relax somewhat, assuming you are in good financial shape. But that does not mean estate planning ends. It is just time for the next chapter.

For instance, you may be inclined to change bequests in your Will, perhaps adding provisions to include grandchildren born in recent years. Or, if there has been a family conflict, you may wish to “disinherit” family members by removing them from your Will or preventing them from serving as a fiduciary or executor of your Estate. Depending on the situation, a codicil may suffice. Proceed cautiously, with the help of your attorney, to ensure that you minimize or eliminate any potential challenges by the party or parties being excluded.

The same principles apply to a power of attorney. It may be advisable to designate a different agent or name a new successor. A divorce can also precipitate amendments to your estate plan as it is highly recommended to remove a future ex-spouse from your fiduciary or beneficiary nominations once divorce proceedings are underway. If you become incapacitated or pass before your divorce is finalized and have not updated your estate plan, it is possible that your future ex-spouse may still have the authority to act for you or inherit from your estate.

If you have not already done so, have your attorney draft a “living will” or health care directive to complement a health care power of attorney. This document provides guidance in life-ending situations and can ease the stress for loved ones.

Finally, create or fine-tune, if you already have one written, a letter of instruction. Although not legally binding, it can provide an inventory of assets and offer directions concerning your financial affairs.

Gain peace of mind

Updating and revising your estate plan today can provide you peace of mind that your loved ones will be taken care of in a manner appropriate to their needs and your intent. If you would like to discuss your estate planning needs, please consider speaking with one of our firm’s knowledgeable and experienced Estate Planning Attorneys.