Estate planning for all ages

When it comes to implementing financial strategies, many advisors would agree that estate planning is often the most overlooked element by their clients. Understandably so, it is tough for people to think about their own mortality and therefore, many tend to procrastinate on these plans. However, setting up an estate plan is vital to a client’s overall financial success, and can avoid major headaches for younger generations who may inherit any wealth.

Below, we outline important estate planning strategies to consider:

For younger clients in their 20's and 30's, it’s important to focus on two categories:

If you are responsible for yourself, and do not have children: At a minimum, a younger person who is living on their own should have papers for incapacity. Such papers state who will make decisions on your behalf if you become incapacitated. These documents include a medical healthcare directive, Power of Attorney, and a living will. Additionally, for a younger person who has accumulated assets, their net worth could be subject to probate without a proper estate plan if they die unexpectedly. In most cases probate creates unnecessary expenses and time for heirs. Every state has probate guidelines, with varying levels of net worth limits, so for younger clients with substantial assets above these limits, it is wise to have a trust that will avoid probate.

If you have children: For younger clients that have children, it’s vital to implement the plans mentioned above, and to have language in their estate plan that addresses guardianship. Without this language, if you pass away, the courts can decide who takes care of your children, and it may not be the best fit for either party.

At Piershale Financial Group, we typically work with clients who are nearing or in retirement, and therefore certain issues -- such as guardianship of a child -- are not as pressing as they might be to a younger generation.

For the older generation, who at this point has accumulated assets, estate plans typically address certain goals common to this age group. The first goal should be to avoid probates which for those with assets, can create substantial unnecessary expense for the heirs. Probate can be easily avoided with a properly executed trust. Additionally, plans should also be structured to avoid death tax, and (as previously discussed) focus on who will make decisions on your behalf if you are incapacitated.

It may not be pleasant to think about, or discuss with your family, but creating an estate plan that covers all the bases will allow you to easily pass inheritances and assets down to younger generations, saving them the stress or aggravation that otherwise would come when having to deal with probate.