You have probably heard people talk about how it's never too early to do your estate planning. You don't have to put it off until you retire. Even if you're in your early 20s, it wouldn't hurt to get an estate plan in place. After all, accidents take lives every day. You can't count on surviving into your 60s or 70s, when people traditionally start thinking about estate planning.
It's (almost) never too late to do your estate planning
Reasons for sibling rivalry
Parents often spend a lot of time trying to diffuse sibling rivalries when the children are young. However, those rivalries do not always go away. They often last into adulthood. When a parent passes away, these rivalries may come back up and cause some serious estate planning disputes.
For instance, imagine that one child has always wanted more attention from their parents. They always felt like they were neglected and that the parents gave more time and attention to a sibling.
Can you put personal property into a trust?
Trusts are often used to hold financial assets. For instance, you may put cash aside so that an heir can use it to pay for college, or you may set up your life insurance policy to pay out into the trust when you pass away.
However, it's important to remember that trusts can go beyond the purely financial. You can also add tangible personal property that you already own. Some examples include:
- Personal papers
- Books
- Computers
- Clothing
- Jewelry
- Artwork
- Collectibles
- Antiques
- Motor vehicles
- Home furnishings
- Furniture
- Scooters
- Airplanes
- Boats
- Pets
- Cattle
- Firearms
- Tools
- Horses
- Photos
If you want to move money around, use a revocable trust
All trusts are not created equal. They all give you different financial options, and they come with their own advantages and disadvantages, depending on your situation.
For instance, maybe your goal is to reduce the tax burden on your estate as much as possible. If so, you may want to use an irrevocable trust. You will need to pick someone else as the trustee, though, and the money leaves your possession. They will administer the trust, and you cannot change it after the fact.
Procrastination and estate planning: The excuses
Do you know people who have not written a will or made an estate plan? Even if you never talk about it with them, you probably do. A shocking amount of people have never drafted a will. They just keep procrastinating and putting it off.
Have you ever wondered why they do this? Some potential reasons include:
- They do not have any idea how to get started. They know they need an estate plan, but it sounds complex and confusing. They just don't know where to begin, so they do nothing.
- They do not feel like working on it. They get distracted by other projects and activities. The estate plan feels like work. They just procrastinate because they have other things they want to do more.
- They worry about doing it wrong. People often procrastinate -- this goes for far more than estate planning -- because of a fear of failure. This may be wrapped up in their confusion over where to begin. They worry about doing it wrong, so they do nothing -- which is actually the biggest mistake they can make.
The 3 main goals of an estate plan
There are dozens and potentially hundreds of individual goals for an estate plan, which differ from person to person. What your goals are depend on what assets you have, what you want to accomplish and what your family needs.
However, the basic goals that you have can be divided into three main areas of focus. They are:
- The basic distribution of the money and assets you control after you pass away.
- Reducing the amount of taxes that your heirs have to pay on the inheritance and ensuring that those taxes are not exorbitant.
- Making sure that, should you become incapacitated and unable to make your own decisions while you are still alive, you have a trustworthy person in place to do it for you.
Before creating a health care proxy, talk to the agent
When you draft a health care proxy, the goal is to pick an agent who will then act on your behalf. If you cannot make medical decisions, they make them for you.
For instance, if you have a stroke and you cannot speak to the doctors, they can decide what type of treatment you want. As you can imagine, it is very important to pick someone you trust explicitly. They could literally hold your life in their hands in some cases.
Sibling rivalry, even in adulthood, can lead to estate disputes
In some cases, estate disputes start because of sibling rivalry. The way that kids have related to each other all their lives can continue even into adulthood. This can make them compete with one another or resent each other. Those feelings come back up when they do not agree with a will or estate plan.
Plus, their parents have now passed away, leaving a leadership void. While Mom and Dad may have been good at handling their kids and their different personalities when they were alive, the children may not know how to do that on their own.
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Life expectancy keeps dropping. Are you prepared?
The general assumption in the modern world is that life expectancy should keep going up. As medicine advances, people live longer. We haven't had a war on the scale of the World Wars in generations, diseases are more contained than they have been in the past and technology has improved at a simply astounding rate.
However, all of that aside, the reality is that life expectancy in the United States has been trending in the wrong direction. It fell between 2016 and 2017, and then it fell again between 2017 and 2018.