Why You Should Do Your Estate Plan Sooner Rather Than Later
After going through a pandemic, rising inflation, mass shooting tragedies, and other events, more people may realize that it is important to plan ahead for the future. Yet while financial planning has been at the top of many Americans’ minds, majority of people have put off creating an estate plan.
According to a new study from Caring.com, a mere one in three people has an estate plan in place. Worse yet, more than 40 percent of those without a Will report that they wouldn’t create one until they had encountered a serious health concern.
If you wait to do your estate plan, you could suffer risks such as losing control over your money, property, health care, and, in some circumstances, the guardianship of your children. In addition, your loved ones may not receive the assets, property, or sentimentally valuable items you would have wanted to pass down to them after your death.
Depending on what health condition or acute injury may unexpectedly befall you, you may be unable to speak, understand others, or advocate for yourself. Part of the purpose of advance planning documents, such as a health care directive, is to maintain your bodily autonomy and express your wishes when you cannot. The reason for creating an estate plan is to put protections in place not only for you, but also for your loved ones.
Barriers to Advance Planning
Despite understanding the need for estate planning, with 64 percent of people saying they believe it is important, most have not made it a priority. In the 2023 study, Americans reported procrastinating on creating an estate plan for the following reasons:
- 35% do not believe they have enough money or assets to leave behind
- 14% said that inflation’s negative effect on their assets has made estate or financial planning less of a priority for them
- 15% reported that they did not know enough about estate planning, so they felt too intimidated to start
- 42% stated they want to begin estate planning, but simply have not gotten around to it
When Should You Create an Estate Plan?
Every American adult should have an estate plan, and it is virtually never too early to go about setting one up.
In fact, once a child turns 18 and legally becomes an adult, they are entitled to make their own decisions regarding their medical care, finances, and education. In gaining legal authority over those parts of their lives, they should consider setting up an estate plan.
For high school graduates, the months prior to moving away to college can be an ideal time to look into getting these kinds of documents in order. At first glance, this may seem overboard to some, but keep in mind the wide diversity of family structures. For example, perhaps a young person would want their property to go to a younger sibling, rather than a stepparent. Similarly, an individual might want the grandparent who raised them, not a parent, to assume decisions over their medical care in the event of an accident.
In the Caring.com survey, 69 percent of the study respondents said they believe that people should have an estate plan before they reach age 55. Despite that, less than half of Americans 55 and older have at least one estate planning document.
What Are My "Big 3" Documents?
Among the most important documents in your estate plan:
- Your Last Will and Testament, which is a set of instructions that details where you want your property to go when you pass away.
- Durable Power of Attorney allows you to designate an individual(s) to make financial decisions on your behalf in the event you can't do it for yourself.
- Health Care Proxy allows you to designate an individual(s) to make health care decisions on your behalf in the event you can't do it yourself.
These Big 3 documents are the most important parts of your estate plan. They form the center of the puzzle, with all other pieces working around them.
To learn more about your Big 3 documents, you can download our FREE report, "The 'Big 3' Of Wealth Preservation Planning" HERE!