Estate planning is not a single event, but it grows and changes as your life and goals evolve. You may be among those who believe creating an estate plan is something you put off until you are older, thinking of retiring or even close to death.
The first flaw in this way of thinking is that few people can predict when their lives will end. The second flaw is that postponing the creation of an estate plan can mean missing out on opportunities to protect and provide for your loved ones.
Your plan changes with you
If you are a single adult with no children, you may think you are the last person who needs an estate plan. However, if you should pass away without any obvious heirs, the courts will determine how to distribute your assets according to Colorado law. Therefore, if you have a favorite nephew, a beloved friend or a charity about which you are passionate, an estate plan can ensure they receive the share of your assets you choose.
Additionally, and perhaps more urgently, you have no one who can legally speak for you if you should become incapacitated. By law, once you are 18, your parents can no longer make medical or financial decisions in your name. Your best friend or romantic partner has no legal authority to decide if you should remain on life support or undergo a risky medical procedure unless you have legally expressed your wishes through a power of attorney or health care proxy.
These are the basics of an estate plan, but your plan can expand as your life changes, for example:
- If you become engaged, you can change your POA designations.
- If you marry, you will need to update your will, your beneficiary designations and perhaps add a revocable living trust for tax purposes.
- As a parent, you will certainly want to name a guardian for your children, create or modify your trust, adjust your life insurance coverage and update your beneficiary designations.
- If any of your children have special needs, a trust for their care will provide protected benefits.
- If you should become divorced, you will have important changes to make to your plan to revoke POA privileges and change beneficiary designations.
After you retire, you may want to consider building trusts for your grandchildren, making charitable contributions through your estate or prepaying your final expenses. You will also want to ensure you have discussed with your attorney the options for long-term care planning.
Throughout your life, as changes occur, there will be additions and subtractions from your original plan. However, you will have a plan in place, and that may prove critical when you least expect it. Then your foresight will pay off, and your loved ones can be grateful for your careful planning.