Estate planning isn’t just about wills or trusts—it’s about protecting your loved ones and ensuring your assets are managed according to your wishes, regardless of your age or financial status. Whether you’re just starting your career or approaching retirement, your estate plan should evolve as your life changes. Below, we outline key estate planning considerations for each stage of life, from early adulthood to your golden years.
Early Career (20s to 30s): Building the Foundation
In your 20s and 30s, estate planning may seem premature, especially when your primary focus is on paying off student loans, building a career, or saving for your first home. However, creating a basic estate plan at this stage is essential for laying a strong foundation. It’s even wise for recent high school graduates stepping into adulthood to have these documents in place as they embark on their next phase of life.
Start by establishing a will. Even if you don’t have significant assets, a will can help you designate who will inherit your belongings and, if you have children, who will take care of them. Also, consider naming a guardian for your children in case of an unexpected event.
Another key step is to designate beneficiaries for any life insurance policies, retirement accounts, or investment portfolios. This ensures that your assets will go to your chosen beneficiaries without delay.
Finally, appoint a durable power of attorney and a healthcare proxy. These designations give someone you trust the authority to make financial or medical decisions on your behalf if you are unable to do so yourself.
Family Years (30s to 50s): Protecting and Growing Your Assets
In your 30s to 50s, your estate planning becomes more complex as your responsibilities grow—whether you’re raising children, buying a home, or advancing in your career. At this stage, it’s important to ensure that your estate plan reflects your family’s expanding needs.
If you haven’t already, consider creating a revocable living trust. A trust allows your assets to bypass the often lengthy and costly probate process, ensuring they go directly to your beneficiaries. It also gives you more control over how and when your assets are distributed.
With children in the picture, it’s a good idea to update your guardianship arrangements and explore funding options for their education. One popular strategy is to open a 529 plan, which can offer tax benefits while helping to secure your children’s future educational needs.
Additionally, you might want to consider revisiting your life insurance needs to ensure your current financial obligations are covered if something were to happen to you. You should also review and update your beneficiary designations to reflect changes in your family situation, such as marriage, divorce, or the birth of children, or even an updated estate plan.
Pre-Retirement and Retirement (50s and Beyond): Fine-Tuning Your Legacy
As you approach your 50s and beyond, retirement planning becomes a key focus of your estate plan. However, it’s equally important to review and update your estate plan to ensure it’s aligned with your current circumstances and future goals.
This is a critical time to evaluate your retirement accounts, such as IRAs and 401(k)s, to ensure they align with your broader estate planning goals. For example, if your spouse is named as a beneficiary, ensure they are equipped to manage the assets or work with a financial advisor. You should also review your healthcare directive and power of attorney arrangements and ensure those named are not only still living but are still the ones you want making important decisions on your behalf.
Finally, it’s important to take time to update your legacy wishes. Beyond distributing your assets, estate planning allows you to make decisions about how you wish to be remembered. Donating to a charity as part of your will? With the help of an attorney and financial planner, consider naming the charity as a partial beneficiary of your IRA instead of being named in the will. Already have or establishing a donor-advised fund? Ensure you’ve named a successor or final charity recipient.
Final Thoughts
Estate planning is not a one-time task; it is an ongoing process that should adapt as your life circumstances change. While the complexity of your estate plan will likely increase over time, starting early ensures that you have a solid foundation. Regardless of your stage of life, working with trusted professionals can help you navigate the decisions necessary to protect your assets, care for your loved ones, and ultimately leave the legacy you intend.
At Grunden Financial Advisory, Inc., we believe in the power of collaboration. Working closely with your estate planning attorney and other trusted professionals, we aim to create a comprehensive estate plan that reflects your goals and values. It’s never too early—schedule a consultation today.
