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When should you start estate planning?

Estate planning is an important topic, but when should you start estate planning? We cover everything you need to know about when to get started.

evident Editorial Team
November 28, 2023
Having children is one of several reasons people should consider making or updating their estate plan

Contrary to popular belief, estate planning is important regardless of the amount of money you have. 

Not only does your estate plan dictate the distribution of your assets after your death, it also dictates several other important things, such as:

  • Your end-of-life medical care;
  • Who will become the legal guardian of your children; 
  • How and where you want to be buried

Even if you don’t have many assets, dying without a plan in place will launch a long and expensive probate process where the government will determine who inherits your belongings. Having a basic will in place can alleviate stress for your family members down the road and give them peace of mind that they’re respecting your wishes. 

So, when should you get an estate plan? To understand when to start estate planning, it’s important first to understand the different aspects of an estate plan.

Key Takeaways

What is an estate plan?

A basic estate plan includes four important documents: Will, living will, power of attorney, and a trust (this is optional). Each document serves the following functions:

Document Use

Your will is like an instruction manual for your family and the courts to follow after you pass on. It dictates several things, including: 

  • The distribution of your assets to specific beneficiaries

  • Allows you to name a legal guardian for your minor children

  • Includes details like how and where you wish to be buried

  • Allows you to name an executor for your estate process

Living will A living will is a legal document in which you state your wishes for your end-of-life medical care. Often called a healthcare directive or healthcare proxy, this document ensures your wishes for your care are carried out in the event you’re not able to communicate your preferences. Unlike a regular will, a living will has no bearing after your death. 
Power of attorney A power of attorney gives another individual the legal authority to make decisions for you. It is common to enact a power of attorney to give someone the authority to manage your property, finances, or medical decisions near the end of your life when you no longer have the mental capacity to handle these things on your own. A medical power of attorney differs from a living will because you outline your own decisions in a living will. By contrast, in a medical POA, you authorize another individual to make healthcare decisions on your behalf without your input.

A trust is a legal agreement that ensures your assets will go to the intended beneficiaries. Trusts differ from wills because the assets you put in the trust are no longer part of your estate – they are placed in the name of the trust. As such, they are generally not subject to the probate process. There are two types of trusts: 

  • Living (revocable) trust: This type of trust allows you to retain control over the terms of the trust so long as you have the physical and mental capacity to do so. 

  • Irrevocable trust: The terms of the trust, beneficiaries it names, and the assets placed in this kind of trust are all permanent. The upside of irrevocable trusts is that they sometimes lead to lower estate taxes. 

Note there are several other types of trusts, including trusts that require the beneficiaries to use the money in a particular way – like an educational trust or a charitable trust. Consult an estate planning attorney to determine which type of trust is best for you.

When should you start estate planning?

So, when should you start estate planning? Many experts advise creating an estate plan once you become a legal adult, and updating your plan every few years (or whenever you encounter major life changes). 

Here is a general guide to estate planning by age:

Your 20s and 30s

Let’s be honest – no one wants to think about death during their 20s and 30s, but you should plan for the unexpected. It’s good to have your affairs in order in the event something does happen, even if this seems unlikely. There’s no need to spend a ton of money on estate planning during this period since your estate plan will likely be quite simple. You can update this plan as your affairs grow more complex over time. 

Consider preparing the following documents as part of your estate plan during this time (these documents are essential regardless of your wealth or assets): 

  • Healthcare power of attorney: In the event you become incapacitated and unable to make medical decisions for yourself, having a Healthcare POA in place ensures someone you trust will have the legal authority to make these decisions on your behalf. 
  • General durable power of attorney: If you do become incapacitated, having a Durable POA in place will ensure someone you trust will have the legal authority to manage your personal affairs, pay your bills, and communicate with others on your behalf. 
  • Will: If you have children, a will is crucial because it allows you to name a legal guardian for your minor children. A will also allows you to distribute your assets to unmarried partners who otherwise would not have a claim to any inheritance.
  • Living will: A living will allows you to outline your wishes for your medical decisions in the event you become mentally incapacitated. This differs from a Healthcare POA, as a POA enables another individual to make decisions for you. A living will would come into play to ensure your wishes were respected should you become terminally ill or become incapacitated.

Your 40s

As you enter your 40s, the same documents are equally important. But now, your affairs may be more complex, and your wishes may have changed. For example, you may want to change the legal guardian for your children or wish to revise your power of attorney. Your 40s is a good time to update these documents. 

Additionally, as you accumulate more assets, you may also want to consider establishing a trust. A trust can allow you to have more control over the distribution of your assets. For example, if you want your children to put their inheritance toward education expenses, or if you want to control when they receive their funds, a trust can allow you to add these types of conditions. Setting up a trust will also help you avoid probate.

Your 50s and 60s

If you begin estate planning in your 20s, you won’t have much to worry about by the time you turn 50 or 60. That said, it would be wise to revisit some of your healthcare-related estate planning documents with your current health conditions and age in mind. 

It’s a good idea to specifically take another look at your living will and powers of attorney you may already have in place to ensure they still adequately reflect your wishes. 

And if you didn’t begin estate planning in your 20s – it’s never too late. At this point in your life, it’s more important than ever to get the documents mentioned above in order if you haven’t already.

What other life events are cause for updating your estate plan?

Experts recommend updating your estate plan every 3-5 years, or whenever you experience a major life change. The following life milestones which we'll discuss in greater detail below are usually cause for updating your estate plan: 

Having children or getting married are just a few of the reasons to update your estate plan

  • When you have children: Ensuring your children are correctly represented in your will (or trust) is very important to ensure they have a legal guardian in place and will be financially secure after you pass away. Additionally, if new family members are born (usually grandchildren) that you want to name as beneficiaries, it’s important to update your documents. 
  • When you start growing a savings account: Once you start accumulating substantial savings, it’s important that you designate a place for that money to go if you pass away. If you don’t, your children or other family members may not have a right to it. 
  • When you purchase real estate or other property: In order to avoid probate, it’s essential to update your estate plan when you add significant assets to your portfolio – including the purchase of a new home. 
  • When you receive an inheritance: If you suddenly come upon more significant assets or money that increases the value of your estate, update your will (and any trusts, if applicable) to ensure everything is accounted for. 
  • When you get married or divorced: Marriage often leads to the joint ownership of property between husband and wife, and can sometimes lead to the creation of joint trusts or joint wills. Spouses are also often named as beneficiaries on life insurance policies. It's important to consider the estate planning impacts of divorce, it’s critical to update your documents when assets are no longer shared with a former spouse.
  • When there’s a death in the family: If one of your intended beneficiaries passes away before you, state laws may dictate who receives that inheritance. Be sure to update your estate plan if this happens. 

So while it's critical to set the foundation for a comprehensive estate plan, it's equally important to revisit your plan following life events that might affect your estate planning needs.

What age should you make a will?

In most states, you must be 18 years old to write a will. So that's when you can write a will, but at what age should you make a will?

Similar to creating estate plans generally, it is a personal decision but never too early to think ahead and plan for the unexpected.  

Everyone's circumstances are different -- some people have children when they are 18, and some may have significant financial assets.

Meanwhile, many people have neither. And if you don't have significant assets, certain estate planning instruments like a financial power of attorney might make less sense at a young age.

But as soon as a person reaches legal adulthood, there could be reasons to begin thinking about getting a plan in place. (If you have questions about the costs involved, be sure to check out our articles on the cost to make and to change a will).

The final word on when to start estate planning

There is no single correct answer to when you should start estate planning. Whether based on your age or certain life events, there are a number of different occasions which might prompt someone to begin the process. 

That said, it’s best to expect the unexpected and ensure you have your estate plan in place sooner rather than later. An estate planning attorney can provide more guidance on what type of estate planning options best suit your needs.