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Estate Planning Needs for Every Stage

Written by: Carmen Sheppard

Posted on: October 14, 2020

stages of life

Many people decide they need an estate plan when the reach a certain age (usually much later in life), but determining when an estate plan is appropriate is less about age than it about your stage in life, explains a recent article from The News-Enterprise: “Life stages dictate estate planning needs.”

Life’s stages can be broken generally into four groups: young adults with limited assets, parents with minor children, seasoned adults nearing retirement, and retirees.

A simple rule of thumb: Every adult should have an estate plan! Without one, you cannot determine who will take care of your financial and legal matters if you become incapacitated or pass unexpectedly. You also do not have a voice in how any of your property will be distributed after your death or who would care for you in an emergency. So, no matter your stage in life, some level of estate planning is vital.

Stage One: Planning for Young Adults with Limited Assets

The first stage—young adults with limited assets—includes a wide array of people. You may be a college student or a young professional in the early years of your career. You may be a young couple, married or not. You may not own real estate or substantial assets and only have your furniture and a ton of student debt. While distributions of assets may be less of a priority than provisions for life emergencies, keep in mind Virginia’s Intestacy laws do not include fiancées or significant others; only spouses.

At this stage, it is crucial to have the basics done: (1) a Financial Power of Attorney and an Advanced Medical Directive to cover you in case you ever become incapacitated, and (2) a Last Will and Testament or a Probate Avoidance Plan to direct the disposition of your estate.

Stage Two: Parents with Minor Children

Once you become a parent, you need to do a little more planning to protect your minor children—particularly if your bundle of joy has a disability that requires special planning.  Estate planning at this stage should, at a minimum, include the basics from Stage One with additional provisions for your children. Your main focus should be naming guardians who will be charged with raising your children (both standby guardians in case of incapacity and guardians of your minor’s person in case of an untimely death), and naming fiduciaries to manage your children’s inheritance (either Trustees of a Testamentary Trust in your Will, Trustees of a Revocable Living Trust, or Custodians under Virginia’s Uniform Transfer to Minor’s Act). Not sure which fiduciary is right for you? Speak with one of our estate planning attorney’s today to learn more about the basics.

A Quick Note on Trusts for Minors:

Many people use revocable living trust as a means of protecting assets for minor children. The revocable trust directs property to pass to minor beneficiary in whatever way the parent deems appropriate. This is typically done so the child can receive ongoing care, until an age when the parents decide the child is mature enough to manage his or her own inheritance. Many families prefer the revocable living trust to a testamentary trust established under a last will and testament because the revocable living trust avoids probate and is able to function without continued court oversight, whereas the testamentary trust will generally be under the purview of Circuit Court until it finally terminates.

Stages Three and Four: Seasoned Adults Nearing Retirement and Retirees

People in the third and fourth stages of life typically have different concerns than their younger counterparts. Perhaps you traded in your full time job to be a full time grandparent. If you have children, they are most likely officially adults, whether they act like it or not. If you do not have children, you have likely saved up a nice nest egg over the years and are concerned with how you can best pass this along to your family, friends, or charities. Whatever the case may be, at this stage of life, the general concern is how to use estate planning to pass your assets along to beneficiaries as smoothly as possible while minimizing taxes.

An estate planning attorney can guide you and make recommendations that will best suit your unique needs. But generally speaking, not only do you want robust updates to the your basic documents outlined in Stage One, you will also want to consider what is the best way to pass on your assets—especially if you have special situations to plan for such as leaving funds to minor grandchildren, protecting your children in a bad marriage, protecting a beneficiary with substance abuse problems, dealing with real estate you own outside of Virginia. In these situations, trusts often are a critical part of protecting and preserving your legacy.

Ready to get started? Speak with one of our estate planning attorneys about your needs. As always, we are happy to help.

Reference: The News-Enterprise (Aug. 25, 2020) “Life stages dictate estate planning needs”

If you are looking to learn more about the basics of estate planning, read this article.

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