For many people, estate planning is a thorny issue. In fact, of Americans who are over 55 years of age, only 18% have a will, or power of attorney. The reality is that many people may feel that they have no assets of value and therefore don’t need to go to the trouble of organizing their assets or making financial and legal plans with an estate planning firm. However, it’s important to realize that estate planning provides much more than simply protecting your assets. It provides insight into what you want to leave behind for your family and loved ones.
Most people have things like bank accounts, retirement accounts, real estate, and personal property. All of these things require different estate planning strategies, and in some cases, unique estate planning documents. For example, you may have some property that you want to leave to your brother and some property that you want to give to your church. Or, you may have an IRA that you want to leave to a specific charity.
What Properties Are at Risk?
Before you can consider the proper age for estate planning, you need to know what assets can be at risk. Do you have a house? A few savings accounts? An IRA? A life insurance policy? The answer to these questions can help you determine the value of your assets at risk and whether planning is appropriate.
When You’re Young
When you’re young, you’re probably still putting together your net worth and paying off student debt. However, it might still be a good time to think about your estate planning. This is because thinking about any assets is a way to begin organizing priorities and setting financial targets for your loved ones and for your future.
When You Have Assets
Once you’ve built up a good nest egg, it’s time to consider an estate planning firm. This is when you should take the estate planning process seriously. Since you may have assets that are significant, you need to consider inheritance tax and how you want the assets to be passed down. You should also consider beneficiary designations for all your assets, and where you want your final resting place to be. Remember to update your beneficiary designations with your estate planning firm at least once a year.