Estate planning steps for each stage of your life

Estate planning is a topic that every person needs to consider throughout their lives, regardless of age.

And it’s not a “set it and forget it” plan; you need to make updates in conjunction with changes in your life to ensure your wishes are clear and the process flows smoothly for your family at your death.

Here are the most important estate-planning steps to take at each stage of life:

1. Young adulthood/recently graduated

As you start making major life decisions, such as where to live and work, you should also consider:

  • Medical and financial powers of attorney: If you became incapacitated, you need both a medical power of attorney and a financial power of attorney in place to have medical and financial decisions made on your behalf by the person you trust most. Without these documents, a loved one must petition to the courts to have guardianship.
  • HIPAA authorization: This permits your doctor(s) to share your medical information with a designated person/persons who may be making decisions on your behalf.
  • Living will: This controls all your end-of-life decisions. In the event you become permanently unconscious or terminally ill, a living will outlines your wishes for life-sustaining procedures.
  • Will: Your assets may be limited at this stage, but a will allows you to dictate who receives those assets upon your death, as well as outlines who will be the executor of your estate. Without a will, state law determines the recipients of your assets and your estate’s executor, which may differ from your desires.
  • List of personal data: Having a compilation of your logins for bank accounts and other personal accounts, as well as listing out where important documentation is stored, can simplify things greatly for your loved ones. It is essential that these are stored securely.
  • Beneficiary designations and life insurance: Your retirement accounts may be the largest assets you have. Retirement plan benefits and life insurance pass by beneficiary designation and are not governed by your will.

2. Marriage

When you get married, there are updates you should make if you want to include your spouse in your plans, as well as new items to implement:

  • Update powers of attorney: Assuming you previously named your parents, siblings or a close friend as agent under your medical and financial powers of attorney, you might consider updating these to be your spouse.
  • Life insurance: Purchasing life insurance, such as term life or universal life, is smart at this stage to protect your spouse in case of your death.
  • Assets and titling: States have different laws regarding how spouses own assets between each other, so you should consult with an estate-planning attorney. Many of these laws can be modified by agreement with your spouse.

3. First child/subsequent children

When you start having children, you should update:

  • Will: You and your spouse should once again update your wills, this time to appoint a guardian for your children in the event you both die unexpectedly. Creating a child’s trust under your will to hold assets for minor children is another appropriate step. Through this child’s trust, you can appoint a trustee to manage the assets and provide directions on the age at which your children receive distributions.
  • Beneficiary designations: Assuming your spouse is named as the primary beneficiary to your accounts, it’s generally recommended to name the children’s trust within your will as the contingent beneficiary.
  • Life insurance: Having children will alter your insurance needs. At this point, a term life policy likely makes the most sense since it keeps premiums low and can cover the time you have children in the home.

4. Middle age

As you move into the middle phase of your life, much of the planning revolves around monitoring and updating your plan as new situations arise. The following should be considered:

  • Life insurance: As your children move into adulthood and are no longer dependent on your income, you may consider scaling back on your current policy.
  • Long-term care insurance: You typically will get the most value with long-term care coverage between the ages of 50 and 60 years old. If you don’t plan to self-fund, long-term care insurance might be right for you.
  • Revocable trust: By this time in your life, you may have accumulated significant assets. To avoid probate, it may make sense to title your assets to a revocable trust.

5. Retirement years

As you move into retirement, there are a few additional items to consider:

  • Update will, revocable trust: Consider whether your children are ready to receive assets outright at your death. If so, any children’s trusts that were created for them can perhaps be removed. Trusts do provide potential creditor protection, protection for inherited assets being divided upon divorce of a child, and other benefits. These should be weighed against the costs of administering a trust after your death.
  • Review life insurance: Depending on why you bought your policy, it may be worth re-evaluating whether continuing to pay premiums makes sense. If your goal is to pay off any debts or leave an inheritance to your loved ones, for example, keeping your policy is likely a strong option.
  • Determining estate tax exposure: Estate taxes are applicable if the value of your assets exceeds a certain amount at your death. For 2020, the federal estate tax exemption per individual is $11.58 million ($23.16 million per couple). Generally, your goal should be to minimize your estate tax exposure, as rates can reach as high as 40%.
  • Conversations and final arrangements: As you age, it’s important to have conversations with your family regarding your financial situation and your final wishes. A final arrangements document can specify what kind of funeral service (if any) you would like, your burial or cremation preferences, as well as how much you’d like to pay for the service.

By having your estate in good order, you can ensure your wishes are fulfilled and your loved ones taken care of. There are many considerations to account for in order to get to this point, though. If you would like to have a deeper conversation about what’s necessary for your situation, please contact a member of our team.

Estate planning steps for each stage of your life


Or continue reading on:

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What the next generation needs to know about their trust fund

Alternative inheritance strategies for blended families

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Estate planning steps for each stage of your life

time to read: 4 min