Estate planning isn’t just for the wealthy
Written by Tiffany Woodfield, Financial Coach, TEP®, CRPC®, CIM®
Q: “At what age should I consider estate planning?“
Many people wrongly assume that they don’t need to start estate planning until they become “old or wealthy.”
In fact, you should consider creating an estate plan when you become a legal adult because once you become a legal adult, your family does not automatically have the authority to make decisions on your behalf.
Imagine if something happened to you, even temporarily.
If you don’t have the proper documents, the laws and courts determine what happens to you and who is authorized to make decisions on your behalf.
In other words, you should do estate planning as soon as you become an adult. To learn more about how to get started, read on!
What does estate planning include?
Estate planning involves arranging for the management and distribution of your assets during your life and after your death.
During life:
- to delegate – Designate someone to make financial decisions on your behalf if you are incapacitated.
- Health care agent – Allows someone to make medical decisions when you cannot. (+)
- Living will – Determines your preferences for end-of-life care and medical treatment.
- Intervius Trust – It is prepared during your lifetime with instructions to the trustee on the management of your assets.
After death:
- will – It explains how your assets will be distributed, the names of the minors’ guardians and the names of the beneficiaries.
- Trusts – Details of how your assets will be distributed and managed after your death.
- Beneficiary designations – Directs how insurance policies and financial accounts are distributed upon your death.
How does estate planning differ from creating a will?
A will is only one component of an estate plan. The will is specifically designed to focus on it how To distribute your assets upon death. in contrast, An estate plan is a comprehensive plan that outlines how your assets will be managed during your life and after your death.
It includes disability planning, tax and financial planning and other documents including a will.
Should I start estate planning in my 20s or 30s?
Creating an estate plan in your 20s or 30s may not seem urgent, but it becomes essential when you consider your online profiles, bank accounts, and dependents.
This service is usually affordable and ensures that your wishes are respected, especially in the event of unforeseen circumstances. Key documents, such as a power of attorney and health care proxy, designate trusted individuals to make decisions on your behalf if you are unable to do so.
So, yes, you should start estate planning as soon as you become an adult.
What life events indicate the need for estate planning?
Many life events can indicate the need for estate planning.
Here are some of the key milestones and changes that should prompt you to create or update your estate plan:
- marriage
- children
- Divorce or separation
- Buying a house
- Health changes
- Start a business
- Retirement
- Death of a family member
- Moving to another country, state or province
Should I wait until retirement to create an estate plan?
If you wait until retirement to create an estate plan, you’re putting yourself at risk if something happens to you beforehand.
It can also result in missed opportunities to set up trusts or other financial instruments to protect assets and benefit your heirs. Finally, this lack of planning can lead to higher costs and tax liabilities.
What are the risks of delaying estate planning?
Risks of delaying estate planning include:
- Death is merciless: Dying without a will exposes your assets to state distribution laws.
- Minor children are not protected: Without a legal document designating a guardian, your minor children may not be cared for by someone you trust.
- No disability plan: Failure to plan means you lose control over who makes decisions about your medical care and finances if you become incapacitated.
- Long term asset allocation: A lack of clear planning can delay the distribution of your assets, and increase stress and potential conflict between family members during an already difficult time.
Can estate planning benefit me even if I’m young and healthy?
definitely! I had a friend who was a “healthy young man” who had a horrific medical emergency that came out of nowhere.
She was peeling potatoes for dinner at home when her husband, a firefighter, entered. Only half of her face was moving when he started talking to her, and she didn’t even notice.
Fortunately, he knew from his training that he needed to take her to the hospital immediately. I thought she was fine and felt a little numb. It turned out that she had had a stroke, and rushing to get medical attention saved her from suffering any permanent damage from that stroke.
When she called to tell me, I remember being confused. I said: “Did your father have a stroke?”
“No,” she replied, “I did.”
My friend never had a cold, always had energy, and was healthy. After this happened, she realized that they did not have a proper estate plan to cover what would happen if she became incapacitated. They did not worry or think about it because they were “young and healthy.”
Remember, life happens and don’t wait until we have all our “ducks in a row.”
Is estate planning necessary if I don’t have significant assets?
Yes, because estate planning ensures that your wishes regarding the distribution of personal property and digital assets, such as social media accounts, are respected.
It designates trusted individuals to make financial and medical decisions on your behalf in the event of incapacity. Additionally, the plan can prevent confusion and conflict among family members during difficult times.
How often should I update my estate plan?
The general rule is to update your estate plan every 3-5 years or sooner if you have a significant life event such as marriage, divorce, move, children or health changes.
Final thoughts
Estate planning is not just a task for retirees or the wealthy, it is an essential step for anyone who wants to take control of their financial, medical, and personal decisions.
Starting early allows you to adjust your plan as your life changes and ensures that your wishes are respected no matter what happens. The unpredictability of life makes estate planning a gift not only to you but also to your loved ones. It can reduce stress and potential conflict during difficult times. In short, a well-thought-out estate plan is the cornerstone of comprehensive financial and life planning.
Summary of key points
- Start estate planning early: Begin estate planning as a legal adult to ensure your family can make decisions for you if necessary.
- Estate Planning vs. Will: A will deals with the distribution of assets after death, while an estate plan covers life and post-death management comprehensively.
- Major life events: Important events such as marriage, children, or health changes indicate the need to create or update an estate plan.
- Risks of delayDelaying estate planning can lead to government intervention, unprotected minors, and unresolved medical or financial decisions.
- Useful for all ages: Even young and healthy people should plan to protect their desires to manage medical, financial and digital assets.
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About the author
Tiffany Woodfield He is a financial coach, cross-border expert, and co-founder of SWAN Wealth based in Kelowna, BC. As a TEP Director and Associate Portfolio Manager, Tiffany has extensive experience working with successful professionals who want to leave a legacy and enjoy an adventurous, career-optional lifestyle. Tiffany combines extensive knowledge from her background as a financial professional with coaching and her passion for personal development to help her clients create a unique path that allows them to live their fullest potential. Tiffany has been a regular contributor to Bloomberg Television and has conducted interviews with national and international publications, including the Globe and Mail and Barron’s.