What Is Estate Planning and Why It Matters at Every Age

Is Estate Planning Only for the Elderly or Wealthy?

You’re young, you’re facing financial challenges, or you’re both. But whether you’re 25 or 75, estate planning is about a lot more than death. A proper estate plan lets you pick your beneficiaries, your medical preferences, your children’s guardians, and more.

Many people postpone estate planning because they think it’s only for retirees or millionaires， but estate planning is part of any responsible adulthood. In this guide, we will go over how estate planning protects your family and wishes at each and every life stage.

What Exactly Is Estate Planning?

Estate planning is the process of deciding what happens to your assets, responsibilities, and healthcare decisions if you pass away or become incapacitated. You can choose who gets to make legal, medical, and financial decisions on your behalf.

The core documents of an estate plan are:

Will

The will is a legal document specifying who inherits your assets after you pass away. Wills can also outline other last wishes of yours, such as who will become the guardians of any minor children you have.

Trust

Trusts are optional and useful. A trust is a legal entity you can use to protect your assets and distribute them. A major advantage of establishing a trust for your assets is that it skips the probate process, which means your beneficiaries can receive their inheritance privately after you pass away.

Power of Attorney

Signing a power of attorney gives someone (the agent or attorney-in-fact) legal authority to make decisions on your behalf. Power of attorney ensures that someone trusted can carry out your wishes regarding legal, financial, and/or medical matters.

Power of attorney is crucial if you become incapacitated or unreachable. You can give durable or temporary power of attorney, and impose conditions or time limits.

Healthcare Directive

An advance healthcare directive (AKA living will) goes over your medical wishes in case you become incapacitated (e.g. a coma).

Without a healthcare directive, your loved ones and/or agent with power of attorney might not know what to do if a medical emergency takes place.

Beneficiary Designations

A beneficiary is a person or entity that inherits something from you via will, trust, or other legal arrangement.

Why Estate Planning Matters for Everyone

Universal need

Regardless of wealth, family status, or age, everyone has something that needs a plan. It could be assets, like a bank account, cash, or jewelry. It could be a cat or a dog that needs a safe home if you pass away. It could be digital data that you either want to give to a family member or you want deleted.

Plus, estate planning includes healthcare directives. People of any age can benefit from estate planning because healthcare needs can pop up at any age, any time.

If you want a trusted loved one to represent you and make choices on your behalf, you have to sign a power of attorney. Otherwise, a hospital or real estate agent would not be able to let them make major choices for you if you are not reachable.

Avoids confusion

Without a plan, the state decides who gets what and who makes decisions for you. For example, if you have any minor children without designated guardians, the government would have to decide who gets guardianship.

Protects loved ones

Many people encounter it themselves: someone they love didn’t leave behind instructions for asset distribution or details of their accounts. Probate court ends up taking over a year to settle, and family members disagree over who should get what because of the lack of clarity.

Having an estate plan can significantly reduce stress and cost for family members. In times of grief or distress, they will have more direction and know what to do next. If you become medically incapacitated, they will be able to find comfort that the medical treatment you’re getting is something you agreed to ahead of time.

Gives you control

If you don’t have an estate plan, an emergency that incapacitates you could lead to others making decisions that you don’t agree with.

By estate planning and creating a will, power of attorney, healthcare directive, and other clauses, you can ensure your medical and financial wishes are respected, even if you can’t speak for yourself.

Estate Planning Through the Stages of Life

In Your 20s and 30s: Laying the Foundation

You may have student loans, a car, or digital assets. This is the life period when planning for the long-term feels very difficult for many young adults.

When you’re in your 20s, it’s a good idea to:

• Create a basic will using LegalZoom
• Create a basic healthcare directive
• Give power attorney to a trusted loved one

For young adults with children, make sure to name a guardian in case you pass away unexpectedly. That way they won’t end up in foster care.

You may also want to give power of attorney to a partner or other trusted person in your life. That way if you become incapacitated, they can still carry out your wishes for you.

In Your 40s and 50s: Protecting Your Family and Wealth

Many people start owning property and businesses in their 40s and 50s. Investments become valuable.

When you hit 40 or 50, it’s time to create a will if you haven’t already. Review and your will if you have one.

A living trust might be worth considering since it lets your beneficiaries skip the probate process, preserving privacy for who gets what.

This is also a good age to review your life insurance coverage. Ethos is our recommended life insurance provider that offers affordable, reliable term life insurance to protect dependents.

Those with children or businesses should also begin planning for future education, inheritance, and business succession.

In Your 60s and Beyond: Preserving and Transferring Your Legacy

For a lot of people, being in their 60s means they already have an estate plan. This life stage involves fine-tuning what you have and minimizing losses. You want to reduce estate taxes and make sure you have designated the right beneficiaries, executors, and trustees. Update your will and any trusts you have.

You should also plan your long-term healthcare in your 60s as health concerns pop up more often as you age.

If you don’t have an estate plan, make sure to seriously plan it out in your 60s. If you have any special goals, like charitable giving or protecting children with special needs, you can set up specialized trusts.

Ensure your loved ones know where documents are stored regardless of your age.

The Real Costs of Not Planning Ahead

Probate delays

Typically, estates will go through probate court. If you have a will, probate will validate and distribute assets as outlined by your will. If you don’t have a valid will, your estate could take months or years to settle.

Family conflict

If there is no will, the court needs to decide who gets what assets. This process is lengthy because the government needs to comb through all of your assets before dividing them based on legal standards and assessments.

The lack of clarity in your estate plan can lead to disputes and strained relationships. What if there is a house–but no instructions on how it is meant to be distributed? Is it the eldest son who gets the house, or the youngest daughter who stayed to take care of you? Families are complicated. Even the most harmonious of families can get into disagreements over an unclear will or lack of estate plan.

By planning your estate well, you can prevent your loved ones from getting into conflict with each other.

Financial impact

Legal fees and taxes can reduce inheritance value. Some estates may be subject to estate tax depending on the estate size. If probate takes longer, it can eat into the inheritance for your beneficiaries.

Setting up a good estate plan can mitigate the financial costs of probate. Funding a trust to distribute assets could even help your loved ones bypass probate entirely and reduce tax burden, saving money in the long term.

Emotional burden

Loved ones face tough decisions if you become ill, injured, or pass away suddenly. If they need to face these tough decisions without guidance, they may blame themselves and doubt whatever choices they make–even if these choices do align with what you would truly want, they wouldn’t know.

How to Start Your Estate Plan

1. Take inventory of your assets

First, list out all of your assets, from objects to bank accounts to real estate. Don’t forget to include digital assets, such as social media accounts and cryptocurrency wallets. Anything that you want to be given away after you pass away should be included in your estate plan. As long as it can legally be inherited, you can divide it to beneficiaries in your will or trust.

You can also consider your debts and financial obligations. Some of these may affect your family.

2. List beneficiaries

It is time to choose who gets what. Note that if you use a will and not a trust to divide up your assets, probate court will go about asset distributions. Probate court records are public, so the process would be less private than using a trust.

3. Decide who should make decisions if you can’t

Power of attorney is important for maintaining control over what happens to you even if you can’t lucidly make decisions. Choose a trusted agent to sign over power of attorney. You can choose multiple agents, one for each type (e.g. one for financial choices, another for medical). Make sure you choose someone trusted and reliable, be that a family member or an attorney.

4. Create essential documents

You can create legally valid documents using the best online tools for estate planning. We highly recommend:

LegalZoom: An online platform that lets you conveniently create wills, trusts, and power of attorney.

Ethos: Ethos makes life insurance coverage easier and more affordable for everyone.

5. Store documents safely

It is a good idea to store both digital and physical copies of your estate plan. Your attorney, agents, and/or loved ones need to be able to know how to access your estate plan documents in case you become incapacitated or pass away.

6. Review and update regularly

Major life events typically trigger the need to review and update your estate plan. Trigger events include marriage, divorce, new child, and home purchases. If you have any new medical preferences or relationship strife, it is also a good idea to change your estate plan as needed.

Estate Planning Is About Love, Not Death

Estate planning might sound morbid no matter your age, but it’s actually a priceless form of protection for you and your loved ones. It is an act of care and responsibility, ensuring your wishes will be carried out whether you pass away or fall ill.

Start your estate plan today. Even a simple, valid will using LegalZoom can go a long way. Your future self and loved ones will thank you, sparing everyone from unnecessary hardship.