Estate planning can start as early as age 18.  For many people, the decision to begin planning depends upon whether they have children, loved ones or others to protect, and if they feel that they have sufficient assets.  Often, this happens in their thirties.  Some may start earlier if they have accumulated or inherited wealth, started a business, expanded their family by birth or adoption, or entered into a serious relationship or marriage.  Realistically though, most procrastinate.

The reasons to start estate planning vary for each individual.  Here are some suggestions of when you should start different types of estate planning.

Ages 18-30: Powers of Attorney

Your life can change in an instant.  If an event leaves you unable to make your own decisions for a period of time or permanently, having a Financial Power of Attorney  (FPOA) and a Health Care Power of Attorney (HCPOA) in place can minimizes stress, questions, time, and cost for your family.  You are the one choosing the person (agent) to handle those issues for you, not a judge or a law.

If you are not competent and do not have a FPOA at the time a health crisis occurs, your family will have to petition to be appointed your guardian in the county court where you live.  This process takes time, money, and the involvement of a physician.  It may result in family discord or someone other than your preferred person making decisions for you.

If you do not have a HCPOA, Pennsylvania’s Act 169 lays out the decisionmakers and the extent of the decisions that can be made without a HCPOA or similar document.  Those default agents may not be the ones you would choose.

Ages 18-40: Wills and Trusts

Do you want to prevent the wrong person(s) from inheriting your hard-earned assets?  If you pass away without a will, Pennsylvania’s intestacy laws determine who receives your solely owned probate assets.  For example, under Pennsylvania intestacy laws, if you are married and have children from a prior relationship and die, your spouse will receive half of your probate assets and your children from the prior relationship will receive the other half of your probate assets.  For more information on probate, view Probate Process – What You Need to Know.

There are many types of trusts.  Trusts that are set up under your will are called testamentary trusts.  If you have minor children or children of any age who would benefit from some help managing their money or assets, a trust can be formed when you pass away.  You can choose to have the income or principal from assets in that trust be distributed over a period of years, making it a staggered distribution trust.  Or, if your beneficiary is a spender, you can have a spendthrift trust for that individual.  Special needs trusts are appropriate for beneficiaries who are receiving government benefits, and you want to ensure that an inheritance from you will not disturb those benefits.

Choosing the executor of your will or the trustee of the trust(s) you set up are important decisions that are best made by you and not the intestacy laws.

Ages 40- 60:  Business Succession Planning

If you own a small family business and want that business to thrive in the next generation as well as provide you (or your spouse) with some retirement income, start thinking through your personal and business issues in your forties. Ideally, your business succession planning should be coordinated with your estate planning to achieve the best result.

Ages 40-80+  Asset Protection Trust

There are many reasons why trust planning is a viable estate planning technique.  Perhaps you want to leave a legacy or give your home to your children (Should I Give My Home to My Children?) and you did not purchase long-term care insurance.  In order to protect your assets from the cost of long-term care, an asset protection trust can be an effective tool.   You must be ready to give up control of the assets that will be transferred from your name to the name of your asset protection trust.  Since the trustee does not personally own the assets in your trust, the assets transferred to the trust are not subject to your trustee’s personal circumstances (divorce, bankruptcy, gambling to name a few).  The trustee is not permitted to transfer assets back to you. personally.  For more on the basics of these trusts, read Just the Basics:  Asset Protection Trusts.

All ages: Update Your Estate Plan

Once you have created your estate plan, it will probably need refined and updated as your life and your circumstances change.  See When Should You Update Your Estate Plan? for examples.

Begin planning early to protect your family and your wishes.  Do not be in denial about the likelihood of something unexpected happening to you.  The first step may be talking to your family.  For tips on how to make that happen, go to Start the Conversation with your loved ones.