I just turned 50. Is an Estate Plan right for me?

I just turned 50. Is an Estate Plan right for me?

April 10, 2024

Question:

I just turned 50. Is an Estate Plan right for me?

 

Answer:

Having an Estate Plan in place can be the right move for adults of all ages. However, we generally see that as clients get older, this question starts to come up more often.

An Estate Plan is important to have in place for anyone who is looking to have control of passing on their assets to their desired heirs. Having a robust Estate Plan as opposed to just having a last will and testament can help to bolster the case for your wishes.

Below, we go into a bit more detail about what an Estate Plan is and how it could be helpful for all adults, regardless of your age.


Estate Plan:

An Estate Plan is essentially a combination of different legal documents which outline your wishes for the designation of your assets and who will handle your responsibilities in the event of death or incapacitation.

This plan encompasses several different aspects including creating a will, designating beneficiaries, creating a trust and potentially designating a Power of Attorney (POA).


Creating a Will:

A will serves as a guide to your final wishes. This is one of the first steps you can take in implementing your estate plan. In your will you can list your assets and the beneficiaries who you wish those assets to go to. An important note to understand is that a will alone does not avoid the probate process.

Probate is a process in which the court system ensures that the will was valid and that you were of sound mind and body when it was created. This probate process can be long and quite expensive depending on a few different factors, one of which could be a family member contesting the will.

A person may contest a will for many reasons. One of the most common is that they believe the person for whom the will was created was not of sound mind when they created it or that they were coerced into the way they designated the beneficiaries.

Avoiding the probate process can be extremely beneficial to both you and your heirs. Thankfully there are ways in which you can set up your Estate Plan in order to do this.


Creating a Trust:

Creating a trust can give your assets and beneficiaries an extra layer of protection as it allows you to avoid the probate process. You, as the creator of the trust, would be considered the grantor. In a trust you can list your assets, your trustees and your beneficiaries.

There are two types of trusts that you can create: Revocable and Irrevocable.

There are major differences between these two types of trusts, mainly having to do with the ownership of the assets placed in the trust.

A revocable trust also known as “Living Trust” allows the trustees to retain control and help transfer ownership of the assets upon the grantor’s death. It also allows the grantor to remove assets from the trust if they please.

An irrevocable trust does not have the same leeway. Once the assets are placed in the irrevocable trust, they are owned by it. To get those assets out of the trust, you would have to go through a court proceeding. One of the key benefits of an irrevocable trust is that assets held within it are generally not subject to estate tax, as they would be in a revocable trust.

This is only one difference of the many between these two trusts so it is important that you work with an Estate Planning attorney that can help you choose what is best for your individual situation.


Designating Beneficiaries:

Making sure you have the proper beneficiaries designated for your assets is another key part of estate planning. Some assets that you should consider having beneficiaries for are your IRA, 401(k) or insurance policies. Making sure that you keep your beneficiaries updated on your different assets is an important thing to consider no matter if you have an estate plan in place or not.


Having a Power of Attorney (POA):

Establishing a power of attorney who can make decisions for you in the case of death or incapacitation can be another part of your estate plan. Without this, it may lead a court to decide what happens to your assets if you are found to be mentally incompetent. Their findings may be contrary to what you would want to happen with your assets. A durable POA is revocable by the principal at any time after it is created but is an action that can help give you further confidence your wishes will be met.


The Final Word:

These are just some of the important features of what having an estate plan in place can do for you. As mentioned earlier, you should consult with an estate planning attorney as well as a financial advisor and tax professional when creating your plan.

An Estate Plan can be right for adults of all ages. You may consider putting one in place when you have a child, buy a house or potentially come into some sort of inheritance.

Another important note is to have these types of conversations with your family members. This will help to make sure that everyone is on the same page when it comes to your wishes and that they understand what steps are being taken to pass on your legacy.

Do you have questions you would like us to discuss here? Click this link to let us know and we hope you found this helpful!

Thanks for reading!


Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Rockline Wealth Management, LLC, a registered investment advisor and separate entity from LPL Financial. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. Rockline Wealth Management, LLC and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.