Think estate planning is for the elderly? Think again. Estate planning is for pretty much anyone 18 years or older, regardless of age or net worth. Whether you have $1,000 or $1 million, creating a will or trust is a smart way to ensure your assets are distributed according to your wishes—no matter what life throws your way. On top of that, appointing a medical proxy, power of attorney, and/or guardianship for minor children are other ways to plan out your future and protect yourself and your loved ones. So, without further ado, let’s walk through each life stage and see how estate planning can benefit you.
Young adulthood (20s-30s)
Young adults (think 20s and maybe early 30s), before walking down the aisle and starting a family, are just starting to build their wealth during this time. Most people this age aren’t even thinking about estate planning yet (heck, who would if you’re young and healthy and don’t have much to give!).
However, even if you have, say, even just $1,000 in your name, you may want to make sure it ends up in the right hands if an unexpected accident occurs. If you are unmarried and without children, state default law will generally hand over your stuff to parents and/or siblings first (this varies by state). So, if you aren’t very close to Mom and Dad or brother and sister, you may want to consider getting a will set up to devise even your modest assets.
The estate planning tool most common for this age group is going to be a basic will. This can handle devising basic and minimal assets to the beneficiaries of your choice. In addition, setting up a medical proxy ensures that someone you trust can make healthcare decisions on your behalf if you become incapacitated due to a freak accident or unforeseen circumstance.
At this age, you may likely have created your first 401k and/or set up your first life insurance plan. You’ll want to ensure the right beneficiaries get ahold of these assets in the event of your demise.
Setting up a medical proxy doesn’t hurt, either. Although at this age, the chances of becoming incapacitated and needing someone to make decisions for you are rare, it’s not impossible.
Finally, if you do have minor children at this age, you’ll definitely want to consider setting up guardianship provisions in a will to declare who you would want to take care of your children if you pass.
Family formation years (30’s-40’s)
At this age in people’s lives, the main focus is typically protecting their minor children in the event of a freak accident or serious illness. For example, if you are a married couple with your first baby, your brain may be going wild with all the what-ifs for the very first time (we totally get it). This is where a will with a guardianship provision would give you some peace of mind that your baby is taken care of, even if you are no longer around.
In addition, at this age, you may have amassed a decent amount of assets (and maybe not… that’s okay, too). Making sure your minor children (or other beneficiaries) are taken care of in the event of your passing is also a good idea. You can devise assets through a trust and/or a will.
Life insurance becomes more important at this stage, especially if you have young children and significant debt (like a mortgage). This can help secure your family’s financial future if something happens to you.
These years may also be the time when folks are inheriting money from their own parents and grandparents. Whether you plan to accept the funds from your parents or simply pass them on to your own children as their inheritance, you can set that up with an estate plan.
And, there’s never a bad time to set up a medical proxy who will make decisions on your behalf should you become incapacitated. Though rare, it’s always good to have these things in place in case of the unexpected.
Mid-life years (40s-60s)
At this point in life, there’s a good chance you have a nice little nest egg you’ve accumulated—whether for retirement or play or both. You may be starting to seriously plan your retirement, you may be paying for college for children and/or helping take care of elderly parents.
At this age, having a trust and/or will in place to ensure your assets are distributed properly is standard practice. While it’s still rare to die at this age, you never know what the future holds—it’s always better to be safe than sorry.
Setting up medical proxies and power of attorneys is also a good idea. It’s more common at this age range to be diagnosed with serious illnesses that may leave you incapacitated and unable to make your own legal and medical decisions (that’s where the proxy comes in and decides on your behalf). In terms of power of attorney forms, think of it as a broad power that lets your agent/representative manage everything from paying bills to signing contracts and even signing your name on documents, ensuring that things keep running smoothly if you’re unable to take action.
Pre-retirement/early retirement (60s-70s)
You’ve done it. You’ve made it to the golden years. Now it’s time to kick back and relax. Enjoy the fruits of your labor. Go golfing. Lay by the pool. The world is your oyster. At this age, healthcare planning is likely going to be the main focus, especially if you already have your financial affairs in place with a trust and/or will.
You may want to specifically dictate how you’d like to be medically treated (pain management, life support, spiritual practices, etc.) should you become incapacitated. This would be in addition to appointing a medical proxy, ensuring that not only is someone trusted to make decisions on your behalf, but those decisions align with your personal values and desires.
At this age, you may want to also review and update your estate plan (trusts and wills). Make sure you’ve updated beneficiaries, updated your asset structure, accounted for any debt in your will, and business succession planning.
And, while morbid, it may also be time to think about final arrangements. Think: funeral expenses, wishes, final resting place, etc. Making these decisions helps ease the burden on your loved ones, allowing them to grieve without the added stress of having to make tough choices during an already challenging time.
Late retirement/advanced age (70s+)
At this point in life, you may be considering moving into an assisted living center, nursing home, or other long-term care arrangement. If that is the case, you will want to rearrange your finances and update your will to accommodate these costs. For example, if you are going into a nursing home, how will that be paid? If it eats up a significant amount of your estate, you’ll want to rework your will/trust to reflect these changes.
At this stage, many retirees look at setting up irrevocable trusts and gifting strategies to reduce the size of their taxable estate. Gifts to children or charities can reduce the tax burden and ensure assets are distributed the way you want.
You’ll also want to really hone in on healthcare management. Review and update frequently your healthcare directive and medical proxy to reflect the most accurate wishes you have. And it doesn’t hurt to review those final arrangement plans either (funeral, burial, etc.).
The bottom line on estate planning through the years
We’ve made it through the journey that’s called life! Your estate plan should be reviewed regularly to reflect your current desires, especially as your financial situation, health, and family dynamics evolve. From your 20s to your 80s, there is always going to be a need for estate planning, even though the focus changes. Things get a bit more serious as you get older, but anyone at any age can benefit from appropriate estate planning. The peace of mind it brings (at any age) is unmatched! Take the steps to get your estate plan in place and breathe a deep sigh of relief that your affairs are settled. Happy planning!
Katherine (Kathy) Bakes is the founder and managing attorney of Bakes Law LLC. Her eleven years of practice involves all aspects of family law, including the formation of prenuptial and postnuptial agreements, divorce and legal separations, child custody, child support, and visitation agreements, spousal support and financial settlements. Kathy also engages in the practice of estate planning including the formation of wills, revocable and irrevocable trusts, durable powers of attorney, health care proxies, HIPAA authorizations and living wills. Kathy is a member of both the Connecticut and Massachusetts state bars after receiving her Juris Doctorate degree from New England Law | Boston. Kathy lives in Southport, CT with her husband and toddler. Outside the office, Kathy enjoys playing the piano and teaches music education to students of all ages.
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