If you’re like most people, you couldn’t wait for your 18th birthday to arrive, as it marked your entry into adulthood. As a child, turning 18 meant independence. But when you got there, you found that it really meant finding a job, going off to college, or both.
And that’s pretty much how the government views it — turning 18 in most states means becoming legally responsible for your own well-being. Whether you’ve already begun accumulating assets or not, the best time to start estate planning is when you start looking after yourself.
Just 32% of Americans have an estate plan, according to a 2024 survey. That’s a six percent decrease from the previous year.
Many people mistakenly believe they’re too young or don’t have enough property to create an estate plan, so they never get around to taking the necessary steps until they’re near the end of their days. However, the financial advisors at Good Life Morehead City believe every legal adult should have an estate plan.
What Is an Estate Plan?
An estate plan is a collection of documents and legal instruments designed to guarantee that an individual’s wishes are carried out if they die or become incapacitated. It can also assist in the care of your loved ones after your passing.
A central aspect of estate planning is that it spells out what will happen to your property once you can no longer make decisions yourself.
You might not have thought much about the things you own now and what would become of them if you were no longer around. With an estate plan, your property will be distributed according to your preferences regardless of its value.
When Does Estate Planning Become Necessary?
Starting the estate planning process at 18 is highly recommended because that’s the time you become responsible for your finances, healthcare, and power of attorney, meaning you speak for yourself in private, business, and legal matters.
If something happens to you and you don’t have an estate plan in place, it will fall on the courts to decide what happens to your assets. Needless to say, this isn’t an ideal situation.
If you don’t have an estate plan yet, consider these important milestones for kick-starting your planning:
- Opening a savings account
- Buying a home or acquiring real estate
- Marrying or remarrying
- Divorcing
- Traveling
- Having a child
- Welcoming grandchildren
- Inheriting money
You can create an estate plan at 18 and review and update it every two to three years or upon each of the life changes mentioned above.
Key Estate Planning Documents
Getting the jump on estate planning can provide security for your family if something happens to you. They won’t need to worry about how to handle your remains or distribute your property while they’re grieving. Starting early also gives you time to accumulate all the documents needed to round out your estate plan.
A will is an essential estate document, although many people pass without one, leaving their loved ones to make decisions they’re not prepared for. With a will, you can name a guardian for your children, appoint a healthcare proxy, and designate a power of attorney. This document can also specify how your assets are to be divided up.
If you have a will and own more than $160,000 in assets, consider creating a trust, as well. This arrangement can also be helpful if you own property and investments.
A trust gives you more control over how your assets are managed, both while you’re alive and after you die. Crucially, it can minimize the tax liability for your estate and beneficiaries and help you avoid probate.
Here are some additional features that should be part of your estate planning efforts:
- Administrator of your estate or executor of your will
- Inventory of physical assets
- List of financial accounts
- List of liabilities
- Beneficiary designations
- Transfer of death designations
- Life insurance policy
- Letter of instructions
- Living will
Establishing these resources and updating them as your life circumstances change can ensure that you and your loved ones are prepared in the event of a worst-case scenario.
Seek Professional Assistance With Early Estate Planning
Now that you understand the importance of having an estate plan and how it can aid those you care about if you pass away or become incapacitated, you’re likely ready to initiate the planning process. Or maybe you have an estate plan already, but it’s outdated.
Either way, the financial advisors at Good Life Morehead City boast a wealth of experience in estate planning and can help you meet your goals. Arrange a no-obligation discovery meeting today to discuss your vision of the future with a qualified professional.