There isn’t a magic formula to determine when to revise your estate plan. Generally, when your situation changes, you should update your plan. Those changes often coincide with the stages of your life. The correlation is best illustrated by considering what an estate plan focuses on for individuals at different ages and times of their lives.
Estate Planning Needs of Young Adults & Young Families
When you are a young, single adult, your estate plan usually is relatively simple, unless you own significant assets. A young adult needs an estate plan to address potential incapacity due to unforeseen events and to ensure that personal property and any real estate interests end up in the right hands if tragedy unexpectedly occurs. The property concerns are particularly important for a single adult with no heirs or with a significant other who is not a spouse.
One consideration frequently addressed in a young adult’s estate plan is providing benefits for charitable organizations or worthy causes that the individual cares about deeply. There are different ways to make charitable gifts. Making them through an estate plan enables you to maximize the benefit to your chosen organizations.
As young adults age, they begin to acquire assets, which makes estate planning even more important. If marriage occurs, making changes in an estate plan to take care of a new spouse becomes a paramount concern in the estate plan.
If young adults begin a family, estate plans must be revised to take the children into account in a number of ways. Distribution of assets must take into account the possibility that the child will inherit as a minor. An estate plan also should address the unthinkable possibility of neither parent being around to care for the child, by designating a guardian and conservator to take care of the child’s personal and financial welfare. If parents fail to designate a guardian and conservator, a judge likely will determine who is responsible for the child’s care and finances if something happens to both parents.
Estate plans of parents (and grandparents) should be updated with each addition to the family. The revisions ensure that all children are covered by the asset provisions in the estate plan and that each child has a designated guardian and conservator. If the family has a child with special needs, the estate plan may include a special needs trust for the child as well.
Estate Planning in the Middle Years of Life
As individuals age into their 30s, 40s, and 50s, they often accumulate more assets and begin to plan ahead for retirement. Even if you don’t know exactly what your plans for retirement are, your estate plan should be structured to protect and grow your assets, as well as to ensure that inheritance of those assets is properly addressed. As assets accumulate during this part of life, many individuals benefit from including a trust in their estate plan.
During the midlife years of parents, children grow into adulthood. An estate plan requires revisions that are age-appropriate for adult children, protecting assets while they are still young (or if they are financially irresponsible), but providing access to responsible children as they age and establish their own lives. When children marry, protecting your assets from potential claims of divorcing spouses of your children is an additional concern that your estate plan should address.
Another contingency many individuals face in midlife is divorce. Ending a marriage usually requires significant estate plan changes. Divorced spouses often neglect to update their estate plans after a divorce, which can cause serious problems later on in terms of a former spouse’s interest in assets. Remarriage — or a first marriage later in life — similarly should trigger changes in an estate plan.
Estate Planning in Your Golden Years
As adults enter their 60s and 70s, retirement often occurs or is in the near future. That may warrant changing the asset treatment in an estate plan.
An overarching concern that should be factored into an estate plan even before you reach age 60 is ensuring that your plan addresses potential needs for incapacity care and long-term care. Nursing home planning and Medicaid planning are of critical importance in every estate plan of a mature adult. If this aspect of estate planning is not undertaken well in advance of the time that a need for care arises, some potential benefits and advantages of specific planning tools that are available may be lost.
Is It Time to Update Your Estate Plan? Talk With Our BRMM Trusted Michigan Estate Planning and Elder Law Attorneys
Now that you know how your estate plan needs to change throughout life, you should think about the last time you reviewed your plan. Is it time to take changes in your life into account in your estate plan? At the law firm of Barron, Rosenberg, Mayoras & Mayoras, P.C., we provide a full range of services relating to estate planning, and elder law. We’ve been serving clients in Oakland County and beyond for more than 40 years. Our clients count on our commitment, experience, and credentials when they turn to us for their legal needs.
Call us today at (248) 494-4577 or use our online form to talk with our experienced estate and probate attorneys.