Row of hanging files. Front file is labeled "Estate Plan"

When Should You Have an Estate Plan?

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Craig Lemoine, Ph.D., CFP®, Director of Consumer Investment Research 

Estate planning touches two critical aspects of our lives: It can direct the distribution of property while providing a structure of guardianship and care for ourselves as well as those we love and care for. But many people feel like estate planning happens when you’re older, and that’s a misconception. Estate planning can — and should — take place earlier in life, particularly if you have children or major assets.

Let’s break down the basics of why you may want to consider putting your estate plan together today.

What Is Estate Planning?

Estate planning involves more than passing on “stuff.” Estate planning empowers decision makers in the event something unforeseen happens. You can create durable powers of attorney that allow your spouse, a family member or a trusted friend to make financial or health care decisions for you if you become incapacitated. And guardianship documents help a court determine who should care for your children or other dependents if you pass.

You can work with a qualified estate planning team to develop a plan that helps your family members in great times of need and provides cash and liquidity when they need it most.

Your estate plan should be designed to meet two goals:

  • Ensure your property effectively and efficiently passes to your family and community according to your wishes
  • Protect and appoint trusted family members and advisors to make decisions and step in to raise minor children in the event of your death or incapacity

When Do You Need an Estate Plan?

You should think about property distribution as you accumulate wealth. Houses, cars, retirement accounts, cash and savings — any property you own is distributed when you die.

But it’s not just set-it-and-forget it. Your estate plan will need adjustment as you age. A will, trust documents and guardianship agreements are never chiseled in stone. When you have young children, an estate plan will likely focus on guardianship agreements and setting up a trust funded with life insurance and other assets to support minor children. The same plan would make less sense as children age and family wealth begins to accumulate.

What Happens If You Don’t Have an Estate Plan?

Without any estate planning, state law determines what happens at your death. If you own a house in Arkansas, the intestate process in Arkansas would control the distribution of that property. If you owned a vacation house in Wyoming, Wyoming law would provide a framework to pass along your mountain hideaway.

State laws may not be aligned with your goals at all. Additionally, states often draw different rules around real property (land, anything attached to land, under land or over land) and personal property (defined as anything you own that is not real property). Between parents, children and siblings of the deceased relying on state rules gets complicated.

Having a will and coordinating beneficiary designations along with property titling can avoid complications and difficulties of leaving property without any estate planning documents. Plus, smart estate planning can minimize unnecessary taxes and fees while helping leave a meaningful legacy to your family, community and the world around you. Working with an estate planning team that consist of a financial planner, estate planning attorney and accountant will help your goals, values and dreams live on in your community and future generations.

The Bottom Line

When should you have an estate plan? When you have property or loved ones. This is a broad and bold answer but without an estate plan you roll dice and rely on state rules that may not reflect your goals or values.

How do you create an estate plan? Meet with a qualified estate planning team including a financial advisor, an attorney and an accountant. This team will help you develop a plan to both ensure your property passes according to your wishes as well as protecting those you love.

Have Questions About Estate Planning?

Talk to a qualified financial advisor today to get the professional advice you deserve. Need help finding a financial advisor in your area? Give us a call today so we can match you with an advisor who will put your needs first.


 

For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

Craig Lemoine is not affiliated or registered with Cetera Advisor Networks LLC. Any information provided by Craig Lemoine is in no way related to Cetera Advisor Networks LLC or its registered representatives.

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Row of hanging files. Front file is labeled "Estate Plan"

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